LME copper set for best week in 6 on weaker dollar, China data

Copper prices in London rose on Friday, on track for their best weekly gain in six weeks, supported by a weaker dollar and lower-than-expected inflation numbers from top consumer China.

Three-month copper on the London Metal Exchange HG1! was up 2.1% at $7,973 a tonne, as of 0719 GMT. The contract gained 4.5% so far this week, the highest since the week ended July 29.

The most-traded October copper contract on the Shanghai Futures Exchange HG1! advanced 3.5% to 63,070 yuan ($9,106.00) a tonne.

The dollar took a breather from its surging rally, making greenback-priced metals cheaper to holders of other currencies.

China's consumer prices rose at a slower-than-expected pace in August amid heatwaves and COVID-19 flare-ups, while producer inflation hit an 18-month low, leaving room for further central bank policy easing and easing worries about falling metals demand due to higher prices.

Aiding sentiment further, China's cabinet announced more steps on Thursday to spur investment to bolster its COVID-damaged economy.

Copper prices are also supported by tight supply of immediately available metals. The premium of cash copper on the LME over the three-month contract (MCU0-3) ended at $108.50 a tonne on Thursday, its highest since November 2021.

LME copper inventories (MCUSTX-TOTAL) fell to 102,725 tonnes, their lowest since April 6, and bonded warehouse stockpiles of the metal in China (SMM-CUR-BON) were at a record low of 142,200 tonnes.

Copper demand in China has improved since last month, CRU analyst He Tianyu said, adding that consumption of the metal is expected to be stronger in the fourth quarter.

However, it is unclear whether copper prices could sustain a rally given the metal's performance is highly correlated with the global economic outlook, which is weighed down by high inflation, an energy crisis and rising interest rates.

LME zinc ZNC1! jumped 2.7% to $3,212.50 a tonne and aluminium ALI1! increased 1.8% to $2,309 a tonne.

ShFE nickel NICKEL1! hit its highest since June 22 of 189,000 yuan a tonne, tin FTIN1! rose 1.8% to 178,680 yuan a tonne and aluminium ALI1! advanced 3% to 18,965 yuan a tonne.

ShFE trading volume was also robust as market participants rushed in orders ahead of the exchange closure for a Chinese public holiday on Monday, a trader said. (CN/HOLIDAY)

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($1 = 6.9262 yuan)