LONDON — Copper edged higher on Tuesday as investors bet that demand will rise and the U.S. dollar weakened, making metals priced in the greenback cheaper for buyers with other currencies.
The benchmark London Metal Exchange (LME) contract for the metal used in electrical wiring was up 0.4% at $8,950 a tonne at 1021 GMT.
Copper has risen from a low of $6,955 last July as top consumer China abandoned its economically damaging COVID-19 restrictions, but rising interest rates and concerns over global growth and bank lending have pushed prices from January’s high of $9,550.50.
The dollar on Tuesday slipped to its weakest since Feb. 3 as investors responded to weak U.S. manufacturing data by betting that interest rate increases will soon stop.
“Improving Chinese demand is likely to be countered by credit concerns in the U.S. and Europe, strong mine supply and ramping Chinese refined copper output,” said analysts at BNP Paribas.
“We expect limited price upside in H2 2023,” they said.
While better than last year, Chinese demand has not risen as strongly as many analysts expected.
Analysts at Guotai Junan Futures said orders by China’s State Grid had failed to meet expectations and new orders in the solar industry and for wire and cable had contracted.
Many analysts and investors remain bullish, however.
“Rising demand (for copper) from electrical vehicles, renewable power generation and energy storage and transmission is already offsetting the property slowdown in China… and an economic slowdown in the West,” said Saxo Bank strategist Ole Hansen.
He predicted prices would rise to record highs above $10,845 in the second half of 2023. “The prospect for an increasingly tight copper market in the years to come will be the driver,” he said.
In other metals, LME aluminum was roughly unchanged at $2,398 a tonne, zinc fell 0.5% to $2,883, nickel rose 0.6% to $23,500, lead gained 0.4% to $2,124 and tin was down 0.8% at $25,835. (Reporting by Peter Hobson, Additional reporting by Siyi Liu and Dominique Patton; Editing by Shailesh Kuber)