METALS-Copper firm, but demand outlook remains gloomy

By Reuters / October 09, 2023 / / Article Link

(Updates prices) By Pratima Desai LONDON, Oct 9 (Reuters) - Copper prices rose to aone-week peak on Monday as Chinese buyers returned after aweek-long holiday, but further gains are unlikely due togenerally weak demand in top consumer China, a strong dollar andrising inventories. Benchmark copper on the London Metal Exchange (LME)was up 0.6% at $8,090 a metric ton by 1615 GMT, after earliertouching $8,142, the highest since Oct. 2. Prices of the metal used in the power and constructionindustries last week touched $7,870, the lowest in more thanfour months. "Things don't seem to be improving in China. The propertymarket is still in trouble," a copper trader said. The military clashes between Israel and Palestinian Islamistgroup Hamas were also a source of uncertainty for markets,traders said. A higher U.S. currency makes dollar-priced metals moreexpensive for holders of other currencies, which wouldeventually subdue demand and prices. Stocks of copper in LME approved warehousesat 170,425 tons are up more than 200% since the middle of Julyand at their highest since May 2022. This rise combined with poor demand prospects have created alarge discount for the LME's cash over the three-month coppercontract , which was last at $68.25 a ton, close to the31-year peak seen last week. Latest data from China showed average daily home salesduring the holiday were down 17%, based on floor area, comparedwith last year, despite a series of piecemeal support measuresto restore confidence in an ailing property market. "For the first time in over two decades, China'smaterials-intensive growth cycle is unresponsive to governmentled macro-support," said Liberum analyst Tom Price. "Its key commodity-consuming sectors of property andinfrastructure are thoroughly built out...while economicactivity there is stabilising somewhat, it remains weak andvulnerable." In other metals, aluminium was little changed at$2,240, zinc fell 0.2% to $2,505, lead retreated0.7% to $2,127, tin advanced 1.6% to $25,050 and nickel climbed 1.6% to $18,880. (Reporting by Pratima Desai; editing by Simon Cameron-Moore andLouise Heavens)

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