(Jan 23): Copper climbed towards US$13,000 ($16,635) a tonne, rising along with other metals on dollar weakness and a broad investor rotation away from currencies and sovereign bonds.
The industrial metal advanced as much as 1.4% on the London Metal Exchange, while nickel and tin jumped. President Donald Trump’s shakeup of the geopolitical order and renewed attacks on the Federal Reserve are spurring a flight to safety. While that would normally only benefit gold and silver, the impact has recently been spilling over into base metals.
That’s adding further impetus to copper, which has been rallying since the middle of last year on sluggish mine output, booming demand from electrification and a surge in shipments to the US ahead of possible tariffs. The industrial metal is now up 15% since the end of November.
While benchmark copper prices rose, spreads between different contracts continued to loosen on the London Metal Exchange as deliveries to warehouses in the US and Asia helped ease pressure on buyers after a sharp squeeze earlier this week.
Spot copper traded at a discount of US$82.84 a tonne to the LME’s three-month benchmark as of Thursday in a market structure known as contango, pointing to improving supply conditions. That was a sharp shift from Tuesday, when it was more than US$100 in backwardation, the opposite market pattern.
Inflows into Asian warehouses were partly fuelled by deliveries from Chinese smelters booked earlier when the arbitrage trade was profitable, according to traders familiar with the matter who declined to be named because the transactions are private.
See also: Rio Tinto copper output climbs as Oyu Tolgoi mine ramps up
Chinese smelters have stepped up exports via deliveries to LME warehouses this year after gains in benchmark prices outpaced domestic rates, as a slowdown in the property sector dragged down domestic consumption. More deliveries are expected in the coming weeks, though the arbitrage window is currently closed, said the traders.
Copper rose 1.1% to US$12,890.50 a tonne on the LME as of 11:27am Shanghai time. Tin jumped 3.5%, nickel was up 2.6% and zinc climbed 1.6%. Iron ore advanced 1% to US$104.65 a tonne in Singapore.
Uploaded by Liza Shireen Koshy
