Copper claws higher to three-week peak as investors balance Iran with Chinese demand

Copper prices hit their highest in more than three weeks on Friday as investors weighed signs of improved demand in top metals consumer China against uncertainty over a fragile ceasefire in the Iran war. Benchmark three-month copper on the London Metal Exchange added 0.6% to $12,755 a metric ton in official open-outcry trading and touched its highest since March 17 at $12,845. It was set to end the week up about 4%. LME copper gained 1.2% following the official rings after a Federal Reserve official said a rate cut was not out of the question if oil prices come down. LME copper has gained 10% since March 23, when it sank to the lowest in over three months, on hopes for ending the war in the Middle East, which may damage the global economy and metals demand. "I don't think there's any appetite to try to go long where there's risk of deterioration ahead of those negotiations in Islamabad," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. Investors were wary as a fragile two-week ceasefire between the U.S. and Iran showed further strain on Friday, a day before they are to negotiate in Pakistan. The market was supported by signs of improved demand in China, where copper inventories in warehouses monitored by SHFE fell 11.5% this week, having slid 37% since March 9. The Yangshan copper premium, which reflects demand for copper imported into China, jumped to $73 a ton, data showed on Friday, its strongest since June last year. "Even though there's concern about Iran, the actual numbers on the ground in China point in the other direction, so the market is trying to navigate between those two elements," Hansen said. Key technical resistance on the upside is $12,800, based on a retracement from February to March and the 50-day moving average, he added. Copper prices shrugged off a further increase in LME inventories to their highest since December 2013. LME aluminium rose 1.1% in official activity to $3,482.50 a ton, as the continued closure of the Strait of Hormuz highlighted supply issues in the Gulf, which accounts for about 8% of global production. Among other metals, LME zinc dropped 0.5% to $3,311 a ton and lead slipped 0.3% to $1,921, while nickel gained 0.5% to $17,175 and tin rose 0.7% to $48,000.