Copper prices saw a slight increase on Friday, buoyed by expectations of U.S. interest rate cuts and a modest rise in physical demand from China. Three-month copper on the London Metal Exchange rose 0.5% to $9,097 per metric ton, recovering after a 1.9% decline the previous day.
Amelia Xiao Fu, head of commodity market strategy at Bank of China International, noted that while the Federal Reserve’s easing stance is positive, both U.S. and Chinese economic data have been weak. Recent U.S. jobs data fell short of expectations, leading traders to speculate on a potential half-percentage-point rate cut in September.
The weaker economic data has led to a decline in the U.S. dollar, making copper and other commodities priced in dollars less expensive for international buyers. Although factory data from China has been underwhelming, there are signs of renewed physical buying interest, with the Yangshan copper premium reaching a three-month high, indicating increased import appetite.
Despite these positive signals, analysts caution that the demand may not be strong enough to drive prices significantly higher, given the overall weak macroeconomic backdrop. The most traded copper contract on the Shanghai Futures Exchange fell by 1.7% to 73,700 yuan ($10,211.57) per ton.
Additionally, SHFE deliverable copper inventories decreased by 2%, although they remain near four-year highs. Market participants are hopeful for a demand pickup in China starting in September, traditionally a seasonally strong period for consumption.