Expectations of increased demand from China have supported the rise of copper once again, taking it to a one-week high despite analysts’ warnings that global economic weakness will thwart any sustainable recovery.

The metal used widely in the power and construction industries is down about 20 percent since hitting a record high of $8,940 a tonne in early July, after which doubts about the strength of Chinese demand gathered momentum.

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While the strengthening US dollar is having an impact on foreign currencies looking to buy metals in US currency the market is expected to see the US dollar drop as concerns focus on supply issues like Freeport-McMoRan Copper & Gold.  Another bonus is the price differential between LME and Shanghai.

“(We) expect copper shipments to increase going forward –
in part because the differential between prices on the Shanghai
Futures Exchange and the LME now stands at a massive $528/t, compared with an average of -$500/t year-to-date.”

That differential could prompt a period of buying by Chinese
consumers to replenish dwindling stocks, which could see large
drawdowns on stocks in LME warehouses.

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