Copper prices in Shanghai and London firmed on Wednesday as U.S. inflation data backed expectations for a Federal Reserve interest rate cut next month, although higher inventories kept gains in check.

The most-traded copper contract on the Shanghai Futures Exchange HG1! closed daytime trade 0.54% higher at 79,370 yuan ($11,060.33) per metric ton, after touching a peak since July 25 at 79,510 yuan earlier in the session.

Benchmark copper HG1! on the London Metal Exchange rose 0.14% to $9,854 a ton, as of 0727 GMT. It hit a more than two-week high on Tuesday, boosted by a 90-day extension to a Sino-U.S. trade truce.

Prospects of easing U.S. monetary policy boosted sentiment across the sector, ANZ analysts said in a note.

The U.S. dollar DXY eased, making commodities priced in the greenback less expensive for buyers using other currencies.

Copper prices were also supported by China’s plans to boost domestic consumption by offering interest subsidies on loans to households and businesses.

Gains were, however, capped by higher LME and SHFE copper stocks, said Matt Huang, an analyst at broker Bands Financial.

Stocks in LME-approved warehouses (MCUSTX-TOTAL) have climbed by 11% so far in August, while SHFE copper warehouses stocks (CU-STX-SGH) are up nearly 13%.

The rise came after U.S. President Donald Trump excluded refined copper from the 50% import tariff effective August 1, ending a wave of front-loading cargoes to the United States to cash in on a bumper premium.

“In the near term, the risk of a supply surplus is looming amid rising stocks. Also, we have not heard many Chinese smelters cutting output yet,” Bands Financial’s Huang said.

SHFE aluminium ALI1! climbed 0.53%, nickel NICKEL1! advanced 0.41%, zinc ZNC1! edged up 0.24% while lead LEAD1! was little changed and tin FTIN1! shed 0.24%.

LME aluminium ALI1! rose 0.61%, nickel NICKEL1! gained 0.15%, tin FTIN1! lost 0.14%, zinc ZNC1! and lead LEAD1! were little changed.
Source: Reuters