LONDON: Copper prices hit their highest in more than a month on Tuesday, lifted by firm demand in top consumer China, declining inventories and hopes that mediators can revive a ceasefire in the Iran war.
Benchmark three-month copper on the London Metal Exchange gained 1.7% to $13,851 a metric ton by 0915 GMT for its strongest since June 15.
“Copper is being pulled higher by a tightening Chinese market. Stocks are falling, import premiums are surging and physical demand has remained stronger than expected despite the seasonal slowdown,” said ING commodities strategist Ewa Manthey.
The most traded copper contract on the Shanghai Futures Exchange gained 1.6% to 105,460 yuan ($15,589.29) a ton.
The premium paid over SHFE prices to buy copper in the spot market jumped to 435 yuan a ton, up from zero last week and the highest since May last year.
Copper stocks in SHFE-monitored warehouses have tumbled by 82% since early May while copper in LME-registered warehouses has slid by 28% in the same period.
The LME cash contract moved to a premium of $8 a ton over three-month prices from a discount of $66 on July 10, indicating short-term tighter supply.
“The rally will need continued evidence of tightness in the physical market to extend much further,” Manthey added.
Industrial metals also gained support from a new push by mediators to revive a ceasefire in the Middle East, which pushed down oil prices and buoyed equities.
The optimism prevailed despite news that Yemen’s Iran-aligned Houthis said they would impose a naval blockade on Saudi Arabia.
LME aluminium gained 0.7% to $3,161 a ton as the market digested lower global primary output in June and an adjustment to tariffs on imports of the metal into the United States.
LME zinc gained 1.4% to $3,569 a ton, lead added 0.5% to $1,889, nickel was up 1.3% at $17,155 and tin climbed 2.2% to $54,050.
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