Copper edges up on dollar weakness, but clouds loom over demand outlook
Copper prices nudged higher on Thursday, aided by a weaker dollar, but persistent concerns over demand and unresolved trade tensions continued to cloud the market's outlook.
Three-month copper on the London Metal Exchange was up 0.5% at $9,694 a metric ton by 1400 GMT, having gained more than a fifth since touching the lowest since November 2023 in April at $8,105.
The dollar index slid to its lowest in over three years following U.S. data, making greenback-priced metals more affordable for buyers using other currencies.
"Some support is coming from the weaker dollar. But more broadly, uncertainty around trade negotiations continues to pressure cyclical assets like copper," said Nitesh Shah, commodities strategist at WisdomTree.
U.S. President Donald Trump said on Wednesday he would be willing to extend a July 8 deadline for completing trade talks, but added the U.S. would send out letters in coming weeks specifying the terms of trade deals to dozens of other countries, which they could then embrace or reject.
UBS said in a note that on the demand side, the latest manufacturing PMIs from China, Europe and the U.S. all remain in contraction territory, highlighting the drag from the ongoing tariff situation.
"Weak PMI readings suggest that final copper demand should be subdued. That said, some front-loading of demand ahead of U.S. tariffs has supported copper consumption, and U.S. imports have tightened the market outside of the U.S.," the note added.
In February, Washington launched an investigation into U.S. copper imports, pushing COMEX prices to a notable premium over LME. Seizing the opportunity, traders have redirected copper flows toward the U.S. from other regions.
U.S. COMEX copper futures added 0.1% to $4.82 a lb, bringing the premium over LME copper to $933 a ton.
On the supply front, Ivanhoe Mines said on Wednesday that it had resumed underground operations at a section of its Kakula copper mine in the Democratic Republic of Congo (DRC), previously halted due to seismic activity. However, the company lowered its production guidance for the year.
"Downgrades to production estimates — particularly from the DRC — are weighing on the supply outlook. From our perspective, the market is heading toward a supply deficit by year-end," added Shah.
LME aluminium and tin were little changed at $2,516.50 and $32,660 a ton respectively, zinc eased 0.6% to $2,638, nickel dipped 0.2% to $15,150 while lead gained 0.5% to $1,996.50.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Jan Harvey, Susan Fenton and Elaine Hardcastle)
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