Copper prices touched their highest in over two weeks on Wednesday as a U.S.-Japan trade deal boosted sentiment, although gains were capped over concern about surpluses and rising inventories.

Three-month copper on the London Metal Exchange was little changed at $9,918 a metric ton in official open-outcry trading after earlier touching its strongest since July 4 at $9,947.

Copper has gained about 4% over the past week and is approaching its three-month peak of $10,020.50 hit on July 2.

Sentiment was boosted after U.S. President Donald Trump struck a trade deal with Japan, lifting global share markets.

Metals investors are focused on a potential trade deal with the world’s top metals consumer China ahead of a meeting scheduled for next week between U.S. and Chinese officials in Stockholm.

Worries about oversupply, however, weighed on the market, highlighted by data showing the copper market was in a surplus of 272,000 metric tons in the first five months of the year.

Also chipping away support was an overhang of inventories in the U.S. after traders took advantage of higher prices there due to the expectation of tariffs being imposed, which are due to take effect on August 1.

“We could see … copper range-trading once the tariffs come into play or possibly even soften,” said Nitesh Shah, commodity strategist at WisdomTree.

“The U.S. will be using up all that stockpile of copper before importing new units from abroad and therefore demand may look a little bit weak for that period of inventory rundown.”

Copper flows are now being diverted away from the U.S. and are showing up in rising LME inventories, which have surged 38% since June 27.

U.S. Comex copper futures (HGc3) gained 1.7% to $5.82 a lb, bringing the premium of Comex over LME copper to $2,903 a ton.

Aluminium was the worst performing LME metal, dropping 0.5% to $2,646.50 a ton.

“I think the producers are quite happy to get on and do a lot of forward selling around these levels,” Robert Montefusco at broker Sucden Financial told a webinar.

Among other metals, zinc rose 0.2% to $2,865, lead gained 0.9% to $2,030, nickel slipped 0.2% to $15,500 and tin climbed 1.5% to $34,400.
Source: Reuters