Copper prices were little changed on Friday and on track to have risen 3% in July following increased risk appetite in equity markets and worries about a lack of visible stocks outside the U.S.
Benchmark three-month copper CMCU3 on the London Metal Exchange was steady at $13,798 a metric ton in official open-outcry trading after hitting $13,883, its highest level since July 22, earlier on Friday.
China demand eases while other LME metals are mixed
China's yuan rose to its highest level against the dollar in more than three years on Friday, making dollar-priced metals more attractive for Chinese buyers. FRX/
However, a recent wave of demand in the country faded, with the Yangshan copper premium SMM-CUYP-CN, a gauge of interest in importing metal to China, stabilising at $112 a ton since hitting $115, the highest since November 2022, on July 22.
Weighing further on the overall sentiment, China's factory activity unexpectedly slipped into contraction in July, pressured by shrinking new orders.
Among other LME metals, aluminium CMAL3 lost 0.5% to $3,178.5 in official activity, although the metal is still up 3% this month due to worries about shipments from the Gulf region amid the Iran war.
"Supply conditions are improving, particularly as Middle Eastern production recovers and Chinese exports remain elevated, but the market is still expected to remain in deficit," Manthey said.
LME zinc CMZN3 rose 0.2% to $3,630, lead CMPB3 fell 0.1% to $1,894, tin CMSN3 was unchanged at $55,000 and nickel CMNI3 added 0.3% to $17,325.
Low inventories and tighter nearby supply support sentiment
"Copper enters August with supportive fundamentals," said ING commodities strategist Ewa Manthey. "The market is still facing a supply deficit and limited inventory buffers outside the U.S., leaving prices vulnerable to any further disruptions or signs of stronger demand."
Available copper stocks in the LME-registered warehouses MCUSTX-TOTAL fell 50% in July as large volumes were marked as being prepared for delivery out and are currently at 101,650 tons, the lowest since mid-January.
Indicating some tightness for nearby supply, the premium of the cash LME copper contract over the three-month forward CMCU0-3 was at $40 a ton on Thursday, its seven-month high, versus a discount of $49 at the start of July.
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