Weak dollar drives copper higher despite inventories

LONDON — A sharply weaker dollar helped copper to rebound on Wednesday from a onemonth low despite a second day of rapidly rising inventories that suggested there is plentiful supply of the metal used in power and construction.

Nickel, meanwhile, pushed through a key technical level to reach a two-and-a-half-year peak and lead and zinc advanced to multi-year highs.

Concern over US protectionism and comments by the US Treasury Secretary welcoming a weak dollar drove the greenback to a three-year low against major currencies.

A weaker dollar makes metals cheaper for holders of other currencies and can stimulate demand. “The main story of the day has to be the weakness we are seeing in the dollar,” said INTL FCStone analyst Edward Meir.

Benchmark copper on the London Metal Exchange (LME) closed up 3.30% at $7,150 a ton after falling 2.10% on Tuesday to $6,885, its lowest since Dec. 19. It was on track for its biggest gain since October.

On- warrant copper stocks available to the market in LMEregistered warehouses jumped by 24,325 tons after a rise of 44,825 tons on Tuesday, taking the increase in on-warrant inventories since Jan. 17 to 51%.

Traders said that after Tuesday’s big rise further inflows had been expected. “We see big stock increases all the time at various points. The market has been talking about it for a couple of weeks (and) because of this doesn’t see it as an issue,” one trader said.

Copper rose back above its technically important 50- day moving average at about $6,944. “We need copper back above $7,075 for a turn in the downward trend,” a trader said.

Higher LME stocks could reflect weaker import demand from China, analyst Helen Lau wrote in a note.

China imported 450,000 tons of unwrought copper in December, down 6.90% year on year, while its refined copper output hit a record high of 865,000 tons.

The global economy is expected to grow at a robust pace this year, a Reuters poll showed, bolstering expectations of solid demand for metals.

LME nickel finished up 5.70% at $13,580 a ton.

Zinc closed 0.80% higher at $ 3,440 after hitting $ 3,456, the highest since August 2007, while sister metal lead was bid up 1.20% to $ 2,640 after touching $ 2,649.50, its highest since August 2011.

Aluminum ended up 0.90% at $ 2,250 and tin closed 1.80% higher at $21,090. —