Copper Defies US Headwinds with China Demand Boost

Copper prices are poised to end the week in positive territory, despite headwinds from US policy uncertainty and higher interest rates. According to data from the London Metal Exchange, three-month copper rose by 0.3% to $14,539 a metric ton, putting it on track for a weekly gain of over 2%. The Shanghai Futures Exchange also reported a stronger physical demand in China, with the most-traded copper contract closing 1.4% higher at 109,620 yuan (or $16,366.57) a ton.

The resilience of copper prices can be attributed to signs of firmer physical buying in China, which has helped offset pressure from US policies. The Yangshan copper premium, a gauge of Chinese demand for imported copper, rose to $121 a ton on Thursday, its highest since October 2022. This comes after the Federal Reserve raised interest rates by 25 basis points this week and indicated another increase could follow later this year.

While copper stocks in warehouses monitored by the SHFE rose by 2.4% to 56,073 tons, indicating a slight easing of LME tightness, the market remains volatile. The near-term contango persisted, with the cash copper's discount against three-month at $7.5 a ton. Copper also benefited from softer oil prices, as Brent crude fell nearly 1% but remained above $100 a barrel.