Copper hits three-week high on China tightness, supply concerns amid Mideast attacks

Copper prices extended gains on Tuesday, hitting their strongest in three weeks, on signs of firmer demand and shortages in China, supply worries due to escalating tensions in the Middle East and a weaker dollar after U.S. inflation data.

Benchmark three-month copper CMCU3 on the London Metal Exchange climbed 1% to $13,675 a metric ton by 1420 GMT, its highest since June 22.

“Copper is finding support from a combination of strong Chinese export data and tightening physical market conditions,” said Ewa Manthey, commodities strategist at ING.

Data showed that exports in top metals consumer China surged in June in their best performance in four months.

The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 rose 1.1% to 104,390 yuan per ton.

“Rising Chinese premiums and falling exchange inventories suggest spot availability is becoming more constrained,” Manthey added.

The premium paid over SHFE prices to buy copper in the spot market SMM-CU-PND rose to 215 yuan per ton on Monday, up from zero at the end of June and its highest since late February.

LME aluminium CMAL3 gained 0.7% to $3,192.50 a ton, nickel added 0.3% to $16,815, zinc CMZN3 advanced 1.3% to $3,613 and tin CMSN3 jumped 2.7% to $54,040.

Lead CMPB3 was the only LME metal in the red, falling 0.8% to $1,854.50 a ton after LME inventories jumped by 80,700 tons or 28% to their highest in 14 years after inflows at Singapore warehouses.

The dollar index =USD extended losses after data showed U.S. consumer inflation slowed more than expected in June, making commodities priced in the U.S. currency cheaper for buyers using other currencies.