LONDON — Copper rose to a near one-week high on Wednesday as the U.S. dollar fell and industrial metals investors closed positions ahead of the end of the quarter and Chinese holidays.
By 0907 GMT, copper for three month delivery on the London Metal Exchange rose to $6,135 (U.S.) a tonne from $5,980 at the close on Tuesday. It earlier touched a session high at $6,143.75 – a level not seen since Sept. 24.
“There is a short-covering rally coming in and you've got quarter end,” said Leon Westgate, an analyst at Standard Bank. “The Chinese market is also about to embark on their extended week long holidays.”
“The market had positioned itself short. Copper looked on the cusp of breaking lower a couple of days ago ... that didn't emerge.”
Chinese markets will shut on Oct. 1 for National Day and Autumn Festival celebrations. Investors, recalling last year's tumultuous slide in London during the holiday, are closing out positions.
Mr. Westgate added that a weaker U.S. currency was also supporting, making metals priced in dollars less expensive for holders of other currencies.
The U.S. dollar slipped against the yen as Japanese exporters sold the U.S. currency to settle business before the quarter ends.
Copper, which has doubled in price this year, is heading for a 23 per cent rise in the third quarter, its third in as many quarters.
Used in power and construction, the red metal has fallen about 6 per cent this month however, as investors worried about falling Chinese demand after disappointing imports data.
Rising inventories have added to the negative sentiment, and on Wednesday the latest LME data showed copper stocks rose 1,425 tonnes to 345,650 tonnes – its highest level since mid-May.
“Developments in labour negotiations at BHP's Spence copper mine in Chile will be closely watched, with workers to vote on a strike this Thursday/Friday – setting the tone for labour talks at other mines,” ANZ analysts said in a note.
Investors also looked to economic indicators to seek market direction, including manufacturing activity data in China and Japan.
China's cabinet laid out detailed plans to curb overcapacity in industries such as aluminum.
Further ahead, traders will eye U.S. GDP data from 1230 GMT, and the much-anticipated non-farm payrolls reading on Friday.
In other metals, aluminum gained to a $1,882.75 from $1,852. LME stocks in aluminum, used in transport and packaging, rose 3,075 tonnes to remain near record levels near 4.6 million tonnes.
Steel making ingredient nickel traded at $17,500 from $17,145 while battery material lead was at $2,290 from $2,232. Zinc traded at $1,929 a tonne from $1,883 and tin edged up to $14,600 from $14,400.
LME data showed a dominant position holds more than 90 per cent of stock warrants and cash contracts in tin. The premium for cash material over the three-month future remains at near five year highs of about $650 a tonne.
