Copper steadied overnight as a weak US dollar and dwindling stocks lent support, with investors also still cheering signs of progress in US-China trade talks.
The latest London Metal Exchange data showed that available, or ‘on-warrant’, copper stocks have slipped to only 29,775 tonnes – their lowest level since July 2005.
The US dollar, meanwhile, sank to a three-week low after Federal Reserve Chairman Jerome Powell suggested he was unlikely to raise interest rates anytime soon.
A weaker US dollar makes US-dollar-priced metals cheaper for non-US investors.
‘The market was focused on the (US) dollar, Chinese data and the (US-China) trade deal – and on all three, people have become a bit more confident,’ said Michael Widmer, analyst at Bank of America Merrill Lynch.
He added that with copper mine supply tight, disruptions escalating and demand set to hold up, he is forecasting a small deficit this year and an average third-quarter price of $US6,750 a tonne.
Three-month copper on the London Metal Exchange ended 0.2 per cent up at $US6,494 a tonne, having hit its highest since July 4 at $US6,540 a tonne on Monday.
US President Donald Trump last weekend deferred plans to increase tariffs on Chinese goods, citing progress in talks with Beijing.
LME data showed one entity holds more than 90 per cent of copper cash contracts and warrants.
This has pushed cash copper to a premium of $US44.50 against the three-month price.
LME copper could break resistance at $US6,525 a tonne and rise to $US6,662 in a week, as suggested by its wave pattern and a projection analysis.
Factory activity in China is expected to have contracted for the third month in a row in February, a Reuters poll showed.
Zinc ended 0.8 per cent up at $US2,740 a tonne, having hit its highest since early February.
LME zinc stocks fell by 8,925 tonnes to 69,475 tonnes, the lowest since October 2007, data showed.
Deliverable stockpiles at the LME are close to only a day’s worth of demand and rebuilding holdings could require a full-blown global recession, according to ICBC Standard Bank.
Aluminium closed 0.2 per cent up at $US1,911 a tonne, lead gained 0.3 per cent to $US2,092.50, tin was down 0.6 per cent at $US21,600 and nickel ended with a 0.1 per cent decline at $US12,960.