METALS-Copper on track for biggest monthly rise since September

By Polina Devitt

LONDON, May 30 (Reuters) - Copper prices fell on Friday under pressure from a stronger dollar, but remained on course for their biggest monthly rise in eight months due to tighter nearby supply, highlighted by the premium for nearby copper contracts against those further out.

Benchmark three-month copper on the London Metal Exchange (LME) CMCU3 lost 0.6% to $9,510 a metric ton by 1602 GMT. The contract is up 4.2% so far in May, on track for its strongest month since September.

The price advance is supported by declining stocks in LME-registered warehouses MCUSTX-TOTAL, down 45% since mid-February to 149,875 tons, the lowest in almost a year. Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 7.2% this week.

As Washington continues an investigation into whether to impose new U.S. copper import tariffs, the premium of COMEX copper against the LME benchmark remains elevated, attracting more metal into COMEX-owned warehouses. HG-STX-COMEX

"The LME copper is facing a bit of a squeeze because the COMEX stocks keep going up and the LME stocks are declining," said Dan Smith, managing director at Commodity Market Analytics.

The spread between the cash LME and the three-month copper contract CMCU0-3 closed on Thursday at a premium of $51.6 a ton, highest since November 2022, indicating worries about nearby supply, partly due to a large holding of 0#LME-WHC copper warrants and cash contracts.

The premium, which was last at $50.4 on Friday, also reflected uncertainty about the supply from Kamoa-Kakula copper mine in the Democratic Republic of Congo, Smith added.

As a group, industrial metals were under pressure as the dollar strengthened and market optimism faded following a court ruling that reinstated the broad tariffs imposed by U.S. President Donald Trump.

As to the demand side, the focus was on the official purchasing managers' index (PMI) in top metals consumer China, due on Saturday. China's factory activity likely contracted for a second month in May, a Reuters poll showed.

The Yangshan copper premium SMM-CUYP-CN, a gauge of China's appetite to import copper, fell 6.5% this week to $86 a ton.

LME aluminium CMAL3 and lead CMPB3 fell 0.2% to $2,444 a ton and $1,958 respectively. Zinc CMZN3 slipped 1.5% to $2,634.50, tin CMSN3 dropped 3.5% to $30,150 and nickel CMNI3 was down 0.5% at $15,295.

China's commodity futures markets will be closed on Monday for the Dragon Boat holiday.

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