China demand drives up copper prices ahead of national holiday
LONDON: Copper prices rose on Tuesday as a result of high demand from top consumer China ahead of its May holiday, concerns about tight nearby regional supply, and a stronger yuan currency.
Benchmark three-month copper on the London Metal Exchange (LME) was up 0.9% to $9,458.50 per metric ton at 1019 GMT, but failed to break through the resistance coming from its 50-day moving average of $9,489.
'We are seeing a trend of restocking in China in advance of the May Day holiday,' said Arthur Parish, an analyst at SP Angel. The mainland China market is due to close from May 1 for a five-day Labour Day holiday.
The Yangshan copper premium, which reflects demand for copper imported into China, was last at $93 per ton, its highest price since December 2023.
This premium is up 6% since Friday, when official data showed a 32% weekly drop in copper inventories in warehouses monitored by the Shanghai Futures Exchange.
These inventories are expected to show further decline in the next SHFE data due on Wednesday, said Alastair Munro, senior base metals strategist at broker Marex, who added that this topic would remain crucial in May.
Copper steadies, focus on US-China trade tensions
'The restocking requirement was exacerbated after inventories were redirected from Asia into the U.S. amid the tariff-fuelled jump in COMEX premiums,' Parish said.
Copper inventories in COMEX-owned warehouses are up 40% so far this month as Washington continues its investigation on possible new U.S. copper import tariffs, keeping the Comex premium over the LME benchmark at unusually high $1,443 per ton.
The spread between the LME cash copper and the three-month contract widened the premium to $30 a ton compared to a discount of $16.5 a week ago, indicating tighter nearby supply in the LME system as well.
Meanwhile, the surplus in the global copper market is expected to widen this year to 289,000 tons from last year's 138,000 tons and to persist next year, according to the International Copper Study Group.
China's yuan strengthened to a one-month high against the dollar on Tuesday, providing further support to the Chinese buying activity.
In other London metals, aluminium rose 1.3% to $2,465 a ton, zinc added 1.2% to $2,663, lead gained 0.2% to $1,970, tin climbed 0.5% to $32,155 and nickel fell 0.1% to $15,595.
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