Copper crawls higher on softer dollar, but investors wary about demand

Copper prices edged higher on Friday, supported by a weaker dollar and supply issues, but gains were modest due to worries about high oil prices hitting demand. Benchmark three-month copper on the London Metal Exchange was up 0.3% at $14,289 a metric ton by 1000 GMT. That marked a decline of 2% since the end of last week. "Metals have seen light turnover again so far this session with copper finding some support with a slightly softer dollar, but the broader tone remains cautious," Neil Welsh, head of metals at broker Britannia Global Markets, said in a note. "High energy costs stemming from the ongoing US-Iran conflict and signs of industrial weakness in China have weighed on sentiment across the complex." The dollar index hit its strongest in 17 months this week, but weakened on Friday, making commodities priced in the US currency cheaper for buyers using other currencies. LME copper has gained 16% over the past six months, largely due to a large shift in inventories to the US attracted by the prospect of potential tariffs there, creating shortages elsewhere. Stocks in warehouses monitored by the Shanghai Futures Exchange have slumped by 79% over the past four months to 38,744 tons, their lowest since January 2024. The SHFE was closed for China's National Day and will reopen on October 8. The prospect of less output in the world's largest copper producer Chile has also underpinned the market, with data on Wednesday showing production fell 12.8% year-on-year in August. Supervisors at Chile's Escondida copper mine, the world's largest, rejected a collective contract offer, paving the way for a potential strike and adding to supply fears. "This adds to an overall slump in output, as the industry struggles to maintain aging infrastructure amid difficult operating conditions," Daniel Hynes, senior commodity strategist at ANZ, said in a note. Investors are awaiting US September payrolls data on Friday, for clues on the health of the economy and to assess whether the Federal Reserve will raise rates again. Among other metals, LME aluminium added 0.5% to $3,137 a ton, zinc rose 0.1% to $3,729, lead ticked 0.4% higher to $1,864, nickel gained 0.3% to $15,675 and tin edged up 0.3% to $54,500.