Copper price shakes off dip, rises

COPPER cathodes.

THE price of copper on the global market recorded a 0.6 percentage point increase, triggered by a brightening outlook for demand, Reuter’s reports.
The price of Zambia’s top export earner copper on the London Metal Exchange (LME) traded at US$5,755 a tonne, shaking off an earlier dip that was driven by a stronger dollar after the United States (US) raised interest rates for the first time this year.
The US Federal Reserve on Wednesday hiked rates by a quarter point and signalled a faster pace of increases in 2017.
“The signs of a stronger copper market heading into 2017 are there,” said Gavin Wendt at commodity advisory firm MineLife in Sydney.
“China’s economy is growing at a healthy pace and rising US rate hikes point to a recovery in the US.”
The rate increase catapulted the dollar to a near-14-year peak against a basket of major currencies.
Similarly, the most-traded copper contract on the Shanghai Futures Exchange was up 0.71 percentage point at 46,880 yuan (US$6,761) a tonne.
Growing tightness in the base metal market continues to weigh on inventories held at exchanges, ANZ Bank commodities analyst Daniel Hynes said in a note.
“Another large drawdown in stocks in November has seen them hit levels not seen since just before the 2008 financial crisis,” he said.
Over the past six months, copper inventories have fallen 18 percent, while lead is down 10 percent and zinc and aluminium are down 7 percent.
“With prices still below the incentive price to induce new supply, we expect inventories will continue to fall in 2017,” Hynes said.

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