Copper steady on hopes of demand boost from China
Copper prices touched their highest in over three weeks on Tuesday on hopes that lifting China’s lockdown restrictions will boost demand, but a stronger dollar chipped away at the gains.
Three-month copper on the London Metal Exchange CMCU3 was little changed at $9,540 a tonne by 1037 GMT, after earlier hitting its highest since May 5 at $9,591.50.
U.S. Comex copper HGcv1 gained 0.8% to $4.34 a lb.
Shanghai authorities removed lockdown fences on Tuesday, preparing to lift a two-month lockdown at midnight, while China’s cabinet announced a package of 33 stimulus measures to revive its pandemic-ravaged economy.
“The news from China is just enough to create a refocus in the market towards a possibility of a pick up in demand,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“If we haven’t seen it already, we’re very close to having seen a bottom in industrial metals, where we can bounce.”
Copper slid 18% during about two months after touching a record high of $10,845 a tonne in early March on fears about a slowdown in China and inflation disrupting economies elsewhere.
In May, LME copper is on track for its second monthly decline with a drop of 2.2%.
But weak inventory levels were a sign of underlying strength in the market, Hansen added.
“It’s quite telling that despite worries about growth and demand there hasn’t been a pick-up of inventory levels at a time of year when you would expect some stock build.”
* Data showed China’s factory activity contracted at a slower pace in May, as restrictions on some plants were lifted.
* The dollar =USD rose against its rivals, making greenback-denominated metals more expensive for buyers using other currencies. USD/
* LME tin CMSN3 added 0.6% to $34,790 a tonne but was set to tumble 13.6% in May, its worst monthly performance since 2012.
* LME aluminium CMAL3 shed 1% to $2,860 a tonne and nickel CMNI3 dropped 2.3% to $28,600, but zinc CMZN3 rose 1.2% to $3,948.50 and lead CMPB3 was slightly firmer at $2,175.50.
Source: Reuters (Additional reporting by Brijesh Patel in Bengaluru; Editing by Kirsten Donovan)