Improved China import prospects fuel copper’s rise, but dollar caps increase

LONDON — Copper prices rose on Friday after data showing a jump in Chinese imports of the metal fueled expectations of stronger demand from the top consumer, but gains were capped by a rising dollar.

Benchmark copper on the London Metal Exchange ended up 0.10% at $6,571 a ton from an earlier session high at $6,674.50.

China’s unwrought copper imports in November, at 470,000 tons, were up more than 40% from the previous month, a sign that winter production restrictions are driving up shipments.

“The November data isn’t surprising given Golden Week holidays in China in October. But it has alleviated demand concerns,” said Julius Baer analyst Carsten Menke.

“China demand will remain the focus for the copper market,” he added.

“We think there will be some headwinds from the property market where indicators also show a softening.”

Property sales by floor area in China fell by six percent in October from a year earlier, compared with a 1.50% decline in September. The decline was the biggest since the first two months of 2015.

Unwrought copper imports for the first 11 months of 2017, at 4.24 million tons, are down five percent from the same period last year. Copper concentrate imports rose 0.10% year on year to a new record high of 1.78 million tons in November.

China accounts for nearly half of global copper demand. Global copper demand is estimated at around 23 million tons this year.

“Chinese traders appear to have bought more copper abroad because some copper smelters in the country have reduced their production for environmental reasons or because the traders expect production to be cut,” Commerzbank analysts said in a note.

“The fact that copper concentrate imports climbed to a record high in November does not tally with this argument, however. It points rather to an ongoing high level of refined copper production in China.”

A higher US currency makes dollar-denominated metals more expensive for non- US firms. The dollar rose against a tradeweighted basket of its rivals, on track for its biggest weekly rise in nearly six weeks.

Support for copper kicks in at $6,500, near Tuesday’s low and resistance is at $6,670, the 100day moving average.

Aluminum traded up 0.10% at $2,011 a ton, but prices are down nearly 10% since early November on concern about rising exports from top producer China.

“It was surprising to see exports pick up again, it does cast doubt on the idea of China capacity cuts tightening the market,” Mr. Menke said.

Zinc ended down 0.20% at $3,083, lead rose 0.60% to $2,448, tin added 0.10% to $ 19,450 and nickel lost 0.90% to $10,950 a ton. —