Weaker dollar, improved trade sentiment support copper

Copper prices held broadly steady on Wednesday as a weaker dollar helped to extend the support gained from this week's 90-day extension of the tariff truce between the United States and top metals consumer China.

Benchmark copper on the London Metal Exchange slipped 0.1% to $9,832 a metric ton in official open-outcry trading. It hit $9,865 on Tuesday and Wednesday, the highest since July 25.

"The 90-day extension for the U.S.-China trade discussions has been welcomed and helped all base metals rise yesterday. Copper is holding onto those gains with the aid of a weaker U.S. dollar," said Nitesh Shah, commodity strategist at WisdomTree.

The dollar hit a two-week low on Wednesday, making dollar-priced commodities more attractive for buyers using other currencies, on bolstered expectations of a Federal Reserve rate cut next month.

Sets of data from China due this week may provide clearer direction to base metals as any weakness could bolden the case for economic stimulus, Shah said.

China's new yuan loans contracted in July for the first time in 20 years, falling well short of analysts' forecasts. However, outstanding total social financing, used by analysts as a gauge of industrial metals demand, rose 9%, hitting the highest since February 2024.

Suspension of production at a major lithium mine by Chinese battery giant CATL earlier this week as it applied to renew its mining licence raised hopes of a broader crackdown on overcapacity in other sectors.

"China has demonstrated its determination to stem 'involution' with the halting of CATL's lithium mine. We are watching to see if China will address copper refining overcapacity through similar measures, which could lend support to prices," Shah said.

LME aluminium rose 0.4% to $2,629.5 a ton in official activity, zinc fell 0.1% to $2,845, lead lost 0.4% to $2,008, tin eased 0.3% to $33,800, while nickel was steady at $15,335.