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Copper eases; set for best week since Oct on supply crunch

Copper prices eased on Friday, as investors braced for a U.S. interest rate hike in March, but they were headed for their biggest weekly gains since October supported by tight supply.

Three-month copper on the London Metal Exchange eased 0.3% to $9,925 a tonne by 0615 GMT, but it was up nearly 3% for the week, its biggest gain in 13 weeks.

The most-traded February copper contract on the Shanghai Futures Exchange fell 0.7% to 71,370 yuan ($11,236.36) a tonne.

“Base metal prices may moderate from the current elevated levels as supply loosens up but we expect prices to remain well above pre-pandemic levels,” CreditSights said in a report.

Tight supply fundamentals, the relatively stable demand outlook, and the exposure to growth trends amid the green transition for metals like copper and nickel, were expected to support prices, it added.

On-warrant LME copper inventories were at 78,000 tonnes, down about 67% from August highs, while stocks in warehouses monitored by the Shanghai Futures Exchange were near their lowest since 2009.

U.S. Federal Reserve Governor Lael Brainard became the latest official to signal the central bank will start raising interest rates in March to battle inflation.

An early rate hike could trim liquidity in financial markets and slow down recovery in the world’s biggest economy.

FUNDAMENTALS

LME aluminium fell 0.4% to $2,939 a tonne, lead was flat at $2,358 and zinc eased 0.2% to $3,555.5. Nickel rose 0.5% to $22,275 a tonne and was on track to register its best week since late June.

ShFE aluminium fell 2.7% to 21,000 yuan a tonne, nickel gained 1% to 164,830 yuan, zinc was up 0.1% at 24,895 yuan, lead rose 1.7% to 15,620 yuan and tin dipped 0.6% to 309,120 yuan.

China’s imports of unwrought copper and copper products slipped in 2021 from the previous year’s record, though imports of copper concentrate hit a historic high.

China’s economic growth is likely to slow to 5.2% in 2022, before steadying in 2023, a Reuters poll showed, as the central bank steadily ramps up policy easing to ward off a sharper downturn.
Source: Reuters (Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich)

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