Copper Goes Quiet as Market Torn Between Oil and China Demand

  • Copper’s 30-day historical volatility falls to two-year low
  • Chinese imports of the metal reached one-year low in August

The copper market is going quiet.

Prices in London moved by less than 0.4 percent in nine of the last 10 days and a 30-day measure of the metal’s price swings is at the lowest in two years, data compiled by Bloomberg show.

Copper has held above a two-month low since the end of August amid a mixed outlook for demand. While expectations that the Federal Reserve will hold off raising interest rates this month has weakened the dollar and made metals cheaper, a rebound in oil has increased production costs. There have also been signs of ample supply and China, the top user, cut imports of unwrought copper to a one-year low last month.

"On the one hand, copper is supported by a weakening dollar," Gianclaudio Torlizzi, the managing director of T-Commodity srl, a Milan-based consultant, said by phone. "On the other hand, fundamentals are neutral because this morning import data is negative, the private consumption is still pretty weak.”

Copper for delivery in three months added 0.3 percent to settle at $4,664 a metric ton by 5:50 p.m. on the London Metal Exchange. Prices are down 0.9 percent this year, the worst performance among the bourse’s six main metals.

Inventories in warehouses tracked by the LME have jumped 67 percent since mid-August as metal stacked up in Asian depots. Stockpiles fell for the first time in 13 days on Thursday, bourse data show.

While China’s imports dropped a fifth month, the Yangshan copper premium, a barometer of supply and demand in bonded warehouses in Shanghai, has risen from near a record low in recent days. That may suggest stronger demand ahead of a seasonal pick-up, Dee Perera, an analyst at Marex Spectron Group in London, said in an e-mailed note. It’s now again profitable to import copper to China, Torlizzi said. 

In other metals news:

  • On the Comex in New York, copper futures rose.
  • Nickel rallied as much as 1.6 percent to a two-week high of $10,370 a ton on the LME. It’s up for a sixth day in the longest run since May.
  • Aluminum and zinc fell, while lead and tin advanced.
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