Copper Prices Climb on Weaker Dollar While Aluminium Retreats Amid Lower Raw Material Costs

Copper prices reached their highest levels in over a week on Wednesday, driven by a softer dollar, while aluminium prices declined due to falling raw material costs and expectations of increased supply.

Three-month copper on the London Metal Exchange (LME) rose 0.1% to $9,160 per metric ton by 1030 GMT, after hitting $9,204, the highest level since January 27. The price uptick was supported by a weaker dollar index, influenced by a rise in the yen. A softer dollar generally makes commodities priced in U.S. dollars more affordable for buyers using other currencies.

Conversely, the most-active copper contract on the Shanghai Futures Exchange (SHFE) dipped 0.3% to 75,290 yuan ($10,342.60) per ton on the first day of trading following the Lunar New Year holidays.

LME aluminium fell 0.9% to $2,613.50 per ton. The metal, commonly used in transport, packaging, and construction, had reached a two-month high on January 20 due to concerns over alumina shortages and elevated prices. However, with alumina prices dropping significantly, market sentiment has shifted.

“The bullishness in aluminium was a bit overdone. With alumina prices a lot lower, there is quite a strong incentive to boost output,” said Dan Smith, head of research at Amalgamated Metal Trading. Alumina prices on the SHFE have fallen by a third this year to 3,588 yuan per ton after reaching record highs in 2023.

Smith also questioned the strict enforcement of China’s government cap on aluminium smelter production at 45 million tons annually. “I have this hunch that maybe that's not going to be quite as watertight as you might think. It wouldn't surprise me if the supply side in China surprises a bit on the upside,” he added.

In other metals, LME zinc fell 1% to $2,779.50 per ton, while lead rose 0.7% to $1,984. Nickel gained 0.4% to $15,335, and tin increased by 0.9% to $30,530.