Copper prices rose in London on Thursday as the U.S. currency DXY weakened, supporting demand for the dollar-priced metal from buyers using Chinese yuan and other currencies.
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Three-month copper on the London Metal Exchange HG1! rose 0.7% to $8,409.5 per metric ton by 1732 GMT.
Copper, used in power and construction, is up just 0.5% so far this year due to the patchy post-pandemic recovery of demand in China, the world’s largest metals consumer, and concerns about economic growth elsewhere. The downturn in euro zone business activity eased in November but remained broad-based.
“The rise in the yuan against the dollar has supported Chinese traders’ purchasing power in the international market, visible in the Yangshan premium’s (SMM-CUYP-CN) yearly high,” said SP Angel metals associate Arthur Parish. The yuan hovered around a four-month high against the dollar on Thursday.
“Some front running ahead of a new wave of (China’s) property stimulus is also supporting buying,” he added. China’s government advisers are calling for a steady growth target in 2024 and more fiscal stimulus, Reuters reported on Wednesday.
Meanwhile, the discount for near-term delivery versus the LME three-month copper contract (CMCU0-3) broke through the $100 mark to reach $100.5 at Wednesday’s market close, its highest since 1992 – indicating plentiful immediate supply.
On the technical front, copper is facing resistance from the 200-day moving average at $8,459.
The dollar index was last down 0.1%. With markets shut in Japan and the United States, currencies traded with some volatility, as liquidity was thinner than usual.
