Copper climbs on weak U.S. inflation, China data caps gains

Copper firmed on Wednesday as the dollar dipped


LONDON - Copper firmed on Wednesday as the dollar dipped on lower-than-expected U.S. inflation figures which softened expectations for stimulus to be tapered soon, while a string of weak data from top metals consumer China capped gains.

Three-month copper on the London Metal Exchange (LME) rose for the first time this week, climbing 0.7% to $9,505 per tonne by 1100 GMT.

Copper and other base metals were mostly trading on macro economic factors such as the U.S. inflation which lowered the likelihood of the Fed withdrawing liquidity soon, said Saxo Bank analyst Ole Hansen. 

A weaker greenback makes dollar-denominated commodities cheaper for non-U.S. firms, a relationship used by funds to generate buy and sell signals.

Capping gains in most metals was faltering factory and retail activity in August in China, owing to fresh coronavirus outbreaks and supply disruptions. The country accounts for about half of global metals consumption. 

Alastair Munro at broker Marex said the ongoing bearish macro sentiment seen in China's below-expectation economic data could already be "largely built into current price levels".

ALUMINIUM: China's aluminium output in August slipped for a fourth straight month to 3.16 million tonnes, as restrictions on metal production and power usage in key smelting hubs keep supply tight. 

The supply concerns have boosted prices to $3,000 a tonne for the first time since 2008. On Wednesday, LME aluminium rose 2.1% to $2,891 a tonne.

SPREADS: LME copper and aluminium spreads remain in contango, indicating adequate nearby supply.

OTHER PRICES: Zinc added 0.6% to $3,070 and lead fell 2.3% to $2,221, after touching its lowest in over three months. Tin was up 1.4% at $33,885 while nickel  rose 1.1% to $19,840.

(Reporting by Zandi Shabalala; editing by David Evans) ((;))

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