Copper dips, but heads for yrly rise on healthy Chinese demand

FE Team | Published: December 29, 2023 21:59:30

LONDON, Dec 29 (Reuters): Copper prices dipped on Friday, pressured by a firmer dollar, but were on track to achieve a modest gain this year on healthy demand from China and hopes for U.S. interest rate cuts.
Three-month copper on the London Metal Exchange (LME) CMCU3 was down 0.1 per cent at $8,613 per metric ton by 1130 GMT. LME copper has gained 2.8 per cent this year, partly reversing a decline of 13.9 per cent in 2022.
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 per cent this year after the country dropped its zero-COVID policy, according to analysts at brokerage China Futures.
The annual growth will moderate to 2.8 per cent in 2024, as 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.
The market was also underpinned by a tighter supply outlook of copper concentrate amid mine closures and disruptions, highlighted by the move by China's top copper smelters on Thursday to lower their first-quarter guidance for copper charges.
Weighing on metals was a firmer dollar index =USD, making commodities priced in the U.S. currency more expensive for buyers using other currencies. FRX/
LME nickel CMNI3 fell 1.3 per cent to $16,515 a ton after LME inventories hit fresh 18-month highs, having surged by 38 per cent this month, highlighting excess supply.
LME aluminium CMAL3 edged up 0.1 per cent to $2,379.50 a ton and zinc CMZN3 added 0.3 per cent to $2,648.50 while lead CMPB3 dropped 0.9 per cent to $2,068.50 and tin CMSN3 shed 1 per cent to $25,420.