Copper extends gains as metals world gathers in London

COPPER climbed for a second day as China’s markets reopened after a weeklong holiday and the global metals industry gathers for the annual London Metal Exchange (LME) Week.

Copper prices that had been largely rangebound for months tumbled last week to the lowest since May as the US dollar strengthened and investors bet on higher-for-longer interest rates that are bearish for demand. Readily available LME stockpiles have also climbed sixfold since June in a sign of ample supply, although they remain relatively low by historical standards.

Copper and other metals are being driven by macro factors such as currency fluctuations rather than supply-and-demand fundamentals, Saad Rahim, chief economist of trading giant Trafigura Group, said at the LME Week seminar on Monday (Oct 9).

Trafigura has been one of the most vocal copper bulls, forecasting record prices when LME inventories plunged earlier this year. Rahim conceded that the timing of those predictions had been wrong.

“Big dollar moves can outweigh even the most compelling fundamentals,” he said. “We can be in a period of very low stocks and yet prices don’t react. Why? It depends on what the dollar is doing.”

Copper futures in Shanghai were flat on their first trading day since Sep 28, even after the drop on the LME during the Golden Week holiday.

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In China, weakness in the property market is a concern, but overall demand for copper, aluminium and other commodities is at record levels, Rahim said.

Metals demand in the biggest commodities consumer has been helped by booming consumption in new-energy sectors from electric vehicles to solar power.

Copper in London rose 0.8 per cent to US$8,110.00 a tonne as at 10.54 am in New York. It dipped below the key US$8,000 threshold last week. BLOOMBERG