Copper prices climbed on Tuesday due to the prospects of interest rate cuts, a weaker dollar, and strong economic data from China. However, elevated stock levels and increasing production in China indicated ample supplies. Benchmark copper on the London Metal Exchange (LME) rose by 1.1% to $10,435 per metric ton at 1030 GMT. The metal, used extensively in wiring and cabling, had reached a record high above $11,100 last week as speculators and investors bet on accelerating demand growth.
Interest rate cuts are expected to stimulate economic growth, while a weaker U.S. dollar makes dollar-priced metals cheaper for non-U.S. currency holders, boosting demand. Robust industrial profits in China also contributed to copper’s gains.
Since early March, copper buying has been driven by expectations that consumption will surpass supply due to growth in sectors such as electric vehicles, automation, and artificial intelligence. BNP Paribas analyst David Wilson commented, “I buy the future demand story. I just think prices have got way ahead of where the fundamentals are. The market looks relatively well supplied currently, particularly in China.”
Shanghai copper stocks have increased by 240% year-on-year, with deliveries to LME warehouses continuing. China’s daily refined copper production rate reached a record high of 38,000 tons in April. Copper stocks in warehouses monitored by the Shanghai Futures Exchange stand at 290,376 tons, near four-year highs, compared to around 30,000 tons in January. Meanwhile, copper inventories in LME-monitored warehouses have been increasing since mid-May, currently at 114,750 tons.
Industrial metals markets are also awaiting U.S. inflation data and surveys of purchasing managers in China’s manufacturing sector later this week to gain insights into future demand prospects and the timing of potential interest rate cuts by the Federal Reserve.
In other metals, aluminum rose by 1.5% to $2,702 per ton, zinc increased by 1.3% to $3,098, lead advanced by 1.5% to $2,333, tin added 2.1% to $33,945, and nickel gained 0.8% to $20,405. 
