METALS-China demand drives up copper prices ahead of national holiday

By Polina Devitt

LONDON, April 29 (Reuters) - Copper prices rose on Tuesday due to high demand from top consumer China ahead of its May holiday, concerns about tight nearby regional supply, and a stronger yuan currency.

Benchmark three-month copper CMCU3 on the London Metal Exchange (LME) was up 0.5% at $9,423 per metric ton by 1600 GMT, but failed to break through resistance at its 50-day moving average of $9,489.

"We are seeing a trend of restocking in China in advance of the May Day holiday," said Arthur Parish, an analyst at SP Angel. The mainland Chinese market is due to close from May 1 for a five-day Labour Day holiday.

The Yangshan copper premium SMM-CUYP-CN, which reflects demand for copper imported into China, was last at $93 per ton, its highest price since December 2023.

This premium is up 6% since Friday, when official data showed a 32% weekly drop in copper inventories in warehouses monitored by the Shanghai Futures Exchange. CU-STX-SGH

These inventories are expected to show further decline in the next SHFE data due on Wednesday, said Alastair Munro, senior base metals strategist at broker Marex, who added that this topic would remain crucial in May.

"The restocking requirement was exacerbated after inventories were redirected from Asia into the U.S. amid the tariff-fuelled jump in COMEX premiums," Parish said.

Copper inventories in COMEX-owned warehouses HG-STX-COMEX are up 40% so far this month as Washington continues its investigation on possible new U.S. copper import tariffs, keeping the COMEX premium over the LME benchmark at an unusually high $1,443 per ton.

The spread between the LME cash copper and the three-month contract CMCU0-3 widened the premium to $25 a ton compared to a discount of $16.5 a week ago.

This premium reflects LME market positioning where one entity holds between 40% and 50% of the metal available to the market, said a trader.

Meanwhile, the surplus in the global copper market is expected to increase this year to 289,000 tons from last year's 138,000 tons and to persist next year, according to the International Copper Study Group.

China's yuan strengthened to a one-month high against the dollar on Tuesday, providing further support to Chinese buying activity.

In other metals, LME aluminium CMAL3 rose 1.2% to $2,464 a ton, zinc CMZN3 added 0.6% to $2,648, lead CMPB3 gained 0.5% to $1,977, tin CMSN3 was little changed at $32,015 and nickel CMNI3 dipped 0.2% to $15,580.

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