Copper prices extended their gains, supported by tightening supply prospects and a weaker U.S. dollar, even as buying activity from Chinese purchasers slowed ahead of the Lunar New Year holiday. Investors remain optimistic about copper due to expectations of rising demand driven by global manufacturing needs, the green energy transition, and the growth of artificial intelligence. Meanwhile, mine supply is being constrained by declining ore grades. Speculative funds, including capital from China, have contributed to the recent months of price increases. A softer dollar has also supported the rally by making commodities priced in other currencies more affordable.

According to Wu Kunjin, head of nonferrous metals research at Minmetals Futures Co., although purchasing by Chinese buyers has slowed ahead of next week’s holiday, risk appetite remains strong overseas. Data from consultancy Shanghai Metals Market showed that spot transactions of refined copper in China fell to 13,400 tonnes on Wednesday, down from a peak of over 38,000 tonnes on February 2. Open interest and trading volume on the Shanghai Futures Exchange have dropped to their lowest levels since November.

At the time of writing, copper on the London Metal Exchange rose 0.5% to $13,166.50 per tonne. Nickel prices climbed 0.6%, marking a fifth consecutive session of gains, propelled by production cuts at the world’s largest nickel miner in Indonesia. Iron ore in Singapore advanced 0.3% to $100.25 per tonne.