Three-month copper on the London Metal Exchange (LME) rose 1.9% to $7,970 a tonne by 1740 GMT. The metal, used in the power and construction industries, is on course for a weekly gain of about 1%.
“Market sentiment has remained bullish but cautious this week,” said ING analyst Wenyu Yao. “In the short term there is not much of a directional signal for the metals markets as we head into the Chinese New Year and businesses wind down.”
INVENTORIES: Global stocks of copper are at their lowest since 2008 despite the approaching Chinese New Year, when inventories usually build because of lower demand, broker Marex Spectron said in a note.
Total inventories of copper in LME-registered warehouses are at 76,550 tonnes, less than half of October’s levels.
SPREADS: The premium for LME cash copper over the three-month contract jumped to $14.50 a tonne, signalling tight nearby supply.
The amount of cancelled inventory — stock earmarked for delivery — was high at 31% and fuelled concerns over tight LME copper.
DOLLAR: The dollar retreated after the U.S. jobs report suggested that some traders may have over-egged a stronger American recovery from the coronavirus pandemic. A weaker dollar makes commodities it is priced in cheaper for holders of currencies.
CHINA STOCKS: Metal held in warehouses monitored by the Shanghai Futures Exchange (ShFE) has increased ahead of the Chinese New Year.
Zinc stocks jumped 34.9% week on week to 60,361 tonnes while ShFE tin inventories rose 18.4% and ShFE aluminium stockpiles increased by 10.2%.
OTHER PRICES: LME aluminium gained 1.3% to $2,019 a tonne, zinc added 2% to $2,680, lead firmed by 0.5% to $2,055, tin added 1.1% to $23,085 and nickel was up 2.7% at $18,115.