Copper prices and other base metals experienced an uptick on Friday, largely driven by a weaker U.S. dollar and a more optimistic global demand outlook following eased trade tensions. On the London Metal Exchange (LME), benchmark three-month copper rose by 0.8%, reaching $9,573.50 a metric ton by 1003 GMT. This month alone, the value of copper has surged by 5%, thanks to a recent 90-day tariff truce between the United States and China aimed at mitigating their ongoing trade war. Dan Smith, managing director at Commodity Market Analytics, commented on the favorable circumstances, noting that the U.S. economy is performing better than expected, trade tensions are diminishing, and recent economic data from China is promising.
These factors collectively enhance risk appetite in the base metals market. Additionally, the U.S. dollar is on track for its first weekly decline against multiple currencies in five weeks. A weaker dollar makes metals priced in dollars more appealing to buyers using other currencies. In China, the onshore yuan closed at its strongest level since November, further bolstering importing capabilities for the world’s largest metals consumer.
In terms of inventories, copper stocks in Shanghai Futures Exchange warehouses decreased by 9% to 98,671 tons, while those in LME-registered warehouses dropped 8% to 164,725 tons, as COMEX-owned storage saw a 3% increase, reaching 174,607 tons. The market is experiencing a backwardation premium of $16 per ton, indicating tight supply in the near term, though it is significantly less than the $49 premium recorded earlier in May. In related markets, LME aluminum rose by 0.5% to $2,467.50 per ton, while zinc and nickel saw slight increases as well. Lead and tin also experienced gains, reflecting overall positive sentiment in the metals market.