Copper prices dip but head for 2% yearly rise; nickel biggest decliner

LONDON — Copper prices dipped on Friday, pressured by a firmer dollar and year-end profit taking, but were on track to achieve a modest gain for 2023 on healthy demand from China and hopes for US interest rate cuts.

Three-month copper on the London Metal Exchange (LME) fell 0.9% to $8,545 per metric ton by 1700 GMT. LME copper has gained 2.1% in 2023, partly reversing a decline of 13.9% in 2022.

Aluminum and tin were also set for gains in 2023 of 0.3% and 2.4%, respectively, while zinc, lead, and nickel were in the red.

Zinc and lead chalked up annual losses of 10.5% and 9.9%, respectively, with nickel the biggest annual mover with a tumble of 44.9%.

The LME index of all six metals ended with a loss of 5.1%.

Investors were divided on the outlook for 2024, with bulls highlighting the prospect for further stimulus in top metals consumer China, demand from the green transition, plus the hope of rate cuts as inflation subsides.

Others are more cautious due to weak economic growth which may cause recessions in some nations.

“It would seem the global economy is due to slow down even further in the first half of 2024 which means the bullish story for metals that some are putting out may have to wait a while,” said Malcolm Freeman, CEO at Kingdom Futures.

In China, however, copper demand climbed 3.2% this year after the country dropped its zero-CO VID policy, according to analysts at brokerage China Futures.

The annual growth will moderate to 2.8% in 2024, as the housing sector remains sluggish but partly offset by increasing investment in power grid, strong solar and wind power sectors, they added.

Copper is widely used in power, construction and transportation sectors.

Weighing on metals was a firmer dollar index, making commodities priced in the US currency more expensive for buyers using other currencies.

LME nickel fell 0.5% to $16,645 a ton on Friday after LME inventories hit fresh 18-month highs, having surged by 38% last month, highlighting excess supply.

LME aluminum edged up 0.3% to $2,385.50 a ton; and zinc added 0.8% to $2,662; while lead dropped 0.9% to $2,067; and tin lost 1.1% to $25,400. —