China lending data help copper to a positive end

LONDON — Copper prices rose on Friday after better-than-expected lending data in China, the world’s biggest consumer, bolstered the demand outlook.

Benchmark copper on the London Metal Exchange (LME) closed 0.8% up at $6,188 a ton. It was still down about 0.4% last week, its first weekly decline since early January, as slowing global growth, the US-China trade dispute and a strong dollar took their toll.

Friday’s gain followed news that China’s banks made the most new loans on record in January after government efforts to jumpstart investment and prevent a sharp slowdown. That offset less positive data showing China’s factory-gate inflation slowed for a seventh straight month in January.

“There’s a tentative improvement in expectations around Chinese demand,” said ICBC Standard analyst Marcus Garvey.

Given that supply of copper is tight, better demand from China should raise prices to about $6,500 if consumption elsewhere does not collapse, he said.

Talks between China and the US made important progress, President Xi Jinping told top US trade negotiators on Friday, adding that meetings would continue in Washington this week. However, several sources told Reuters there was stalemate on key sticking points. White House adviser Larry Kudlow, meanwhile, said there had been no decision to extend a March 1 US deadline for a deal.

Fears that tariffs would curtail metals demand have pushed prices sharply lower since mid2018.

US manufacturing output fell by the most in eight months in January.

On-warrant stocks of copper available to the market in LMEregistered warehouses fell to 74,600 tons, nearing 13-year lows reached in October.

Adding to concerns of a supply squeeze, one entity held 50-79% of LME copper warrants.

The discount of cash copper to the three-month contract has flipped to a premium, suggesting less nearby supply is available.

Copper stocks in Shanghai Futures Exchange warehouses have doubled to more than 200,000 tons in the past month, with inventories of aluminum and zinc also higher.

A dearth of copper mine projects means the market will remain in deficit until 2027 and prices could rise to $10,000 a ton by 2025, Capital Economics said in a note.

LME aluminum ended 0.5% up at $1,859 a ton; zinc rose 2.4% to $2,653; nickel gained 1.6% to $12,400; lead finished 2% higher at $2,078; and tin closed 1.4% up at $21,200. All except tin were down on the week. —