METALS-Copper edges up on dollar weakness, but clouds loom over demand outlook

By Ashitha Shivaprasad

June 12 (Reuters) - Copper prices nudged higher on Thursday, aided by a weaker dollar, but persistent concerns over demand and unresolved trade tensions continued to cloud the market’s outlook.

Three-month copper CMCU3 on the London Metal Exchange was up 0.6% at $9,703 a metric ton by 1600 GMT, having gained a fifth since touching the lowest since November 2023 in April at $8,105.

The dollar index .DXY slid to its lowest in over three years following U.S. data, making greenback-priced metals more affordable for buyers using other currencies. USD/ MKTS/GLOB

"Some support is coming from the weaker dollar. But more broadly, uncertainty around trade negotiations continues to pressure cyclical assets like copper," said Nitesh Shah, commodities strategist at WisdomTree.

U.S. President Donald Trump said on Wednesday he would be willing to extend a July 8 deadline for completing trade talks, but added the U.S. would send out letters in coming weeks specifying the terms of trade deals to dozens of other countries, which they could then embrace or reject.

UBS said in a note that on the demand side, the latest manufacturing PMIs from China, Europe and the U.S. all remain in contraction territory, highlighting the drag from the ongoing tariff situation.

"Weak PMI readings suggest that final copper demand should be subdued. That said, some front-loading of demand ahead of U.S. tariffs has supported copper consumption, and U.S. imports have tightened the market outside of the U.S.," the note added.

In February, Washington launched an investigation into U.S. copper imports, pushing COMEX prices to a notable premium over LME. Seizing the opportunity, traders have redirected copper flows toward the U.S. from other regions. 0#LMECMXCU:, HG-STX-COMEX, MCUSTX-TOTAL

U.S. COMEX copper futures HGc2 added 0.3% to $4.83 a lb, bringing the premium over LME copper to $946 a ton.

On the supply front, Ivanhoe Mines said on Wednesday that it had resumed underground operations at a section of its Kakula copper mine in the Democratic Republic of Congo (DRC), previously halted due to seismic activity. However, the company lowered its production guidance for the year.

"Downgrades to production estimates — particularly from the DRC — are weighing on the supply outlook. From our perspective, the market is heading toward a supply deficit by year-end," added Shah.

LME aluminium CMAL3 rose 0.3% to $2,522 a ton, lead CMPB3 gained 0.4% to $1,995.50 and tin CMSN3 added 0.1% to $32,690 while zinc CMZN3 eased 0.4% to $2,643.50 and nickel CMNI3 dipped 0.2% to $15,140.

 For related news and prices, click on the codes in brackets: LME price overview      RING= COMEX copper futures  0#HG: All metals news         MTL   All commodities news      C 
 Foreign exchange rates FX=SPEED GUIDES LME/INDEX