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Copper rally punctured by weak Chinese growth data

Copper prices held steady on Tuesday as weak economic data from China, the metal’s biggest global consumer, punctured a speculator-driven rally.

Benchmark copper on the London Metal Exchange (LME) was up 0.2% at $9,123.50 a tonne in official open-outcry trading, having touched a high of $9,257 last Friday.

Prices of the metal used in electrical wiring have surged 9% this month after China’s dismantling of economically damaging COVID-19 controls raised hopes that demand will revive.

In the short term, however, Chinese consumption is weak and likely to remain so as the country heads into the Lunar New Year holidays next week.

Chinese import premiums are falling and Shanghai exchange inventories are rising.

also fell for the first time in six decades, underlining its long-term economic challenges.

Shares in Asia and elsewhere lost ground and the yuan slipped to a one-week low, making dollar-priced metals costlier in China.

“We are heading for higher (copper) prices this year, but this is a marathon not a sprint,” said Saxo Bank analyst Ole Hansen, predicting a temporary pause or reversal of the rally.

Speculators have flooded into the market, swelling their net long position in COMEX copper futures to its largest since April.

Open interest in industrial metals increased by about $18 billion last week for the biggest weekly rise since Russia invaded Ukraine, JPMorgan analysts said.
Source: Reuters

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