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Copper prices rise on weaker dollar and hopes of stronger Chinese demand

The copper price rose on Friday, as a lower dollar and expectations of stronger demand in China boosted prices ahead of the U.S. Jobs Report later in the day that could provide greater clarity about the U.S. rate trajectory.

In open-outcry official trading, the price of three-month copper at the London Metal Exchange increased by 0.5% to $9.947 per ton. On Wednesday, the contract reached a five-month peak of $10.038 due to the growing expectation of a U.S. rate cut in the latter part of the month.

A lower interest rate improves prospects for metals that are growth-dependent, and a weaker U.S. dollar, which fell by 0.3% last week, makes metals priced in dollars more attractive to holders of other currencies.

JX Advanced Metals, a leading copper smelter in Japan, said that it would likely cut its copper production by thousands of tons during the fiscal year that ends in March.

Inventory in Comex warehouses in the U.S. The Comex copper futures, which were already at their highest level in 22 years, continued to climb this week because of the premium that remained between the LME benchmark and the Comex copper contracts.

A copper trader stated that the premium fell at the end July when Washington removed refined copper metals from its import tariffs for some copper products. However, the drop was not enough to cause a sell-off of U.S. stock.

Stocks at the LME registered warehouses The market was stable. It has risen by 74% since June and the discount on the cash for the next three months is still in place. At $61 per ton.

Analysts at Macquarie wrote in a report that "Even though copper is still distorted due to the hangover from U.S. stockbuilding, LME spread has shown signs of a loosening ex China market. However, any price weakness seems to have been met with Chinese buying."

Yangshan Copper Premium The price of copper, which is a measure of the demand for imported copper into China, remained at 57 dollars per ton, its highest level in three months.

Other London metals rose in official activity by 0.8%, to $2.612 per ton. Zinc increased 0.7%, to $2.864.5; lead rose 0.5%, to $1.995; tin grew 0.3%, to $34,675; and nickel was up by 0.3%, at $15,275. (Reporting and editing by Hugh Lawson, Tomaszjanowski, Lucas Liew)

(source: Reuters)