Copper climbs on falling inventories and easing demand fears

Copper prices rose to their highest in more than a week on Monday as lower oil prices alleviated anxiety about economic growth and demand while the market also focused on dwindling inventories. Benchmark copper on the London Metal Exchange rose 0.6% to $13,875 a metric ton in official rings after touching $13,900 a ton for its highest since July 22. Traders said the drop in oil prices after U.S. President Donald Trump called off a fresh attack on Iran as he sought a deal to curb Tehran's nuclear ambitions has also eased concern about price pressures and boosted sentiment. "The markets continue to be headline-driven as we start the week, with energy markets serving as the primary focal point," Britannia Global Markets said in a note. "The underlying fundamental picture (for copper) looks to remain supportive. Inventories in both China and London Metal Exchange warehouses are in a state of depletion." Copper stocks in LME-registered warehouses have fallen nearly 40% since the end of May to their lowest since February at 244,025 tons. Producers and traders have been shipping copper to the United States since February last year, when President Donald Trump threatened import tariffs, creating a premium for U.S. copper over LME prices. Elsewhere, zinc was up 0.9% at $3,676 a ton after climbing to a four-year high of $3,703.50 on worries over supplies on the LME. This was due to three large holdings of cash contracts and warrants <0#LME-WHC> that also created large premiums for nearby zinc contracts against longer-dated forwards. This was reinforced by a large short maturing on zinc futures this month <#LME-FBR>. The premium, or backwardation, for cash zinc over the three-month forward is near levels last seen in December. LME zinc stocks have dropped to 99,285 tons <0#MZNSTX-LOC>, down 25% since the middle of June, with cancelled warrants — metal earmarked for delivery — at 26% also adding to the unease. In other metals, aluminium gained 0.8% to $3,210 a ton, lead slipped 0.3% to $1,871, tin added 0.4% to $55,500 and nickel fell by 1.3% to $17,025.