Copper leads base metals higher on China demand hopes
LONDON — Copper and other industrial metals prices rose on Tuesday on hopes that protests against COVID-19 curbs in China will lead to a faster easing of the rules that have stifled economic growth and metals demand.
Bets on such a loosening also pushed up global stock markets and oil prices as investors snapped up riskier, growth-linked assets.
Chinese regulators meanwhile made it easier for property developers to raise money, a boost for a metals-intensive sector struggling with a debt crisis.
The yuan strengthened against the dollar, making dollar-priced metals cheaper for Chinese buyers.
Benchmark copper on the London Metal Exchange (LME) was up 1.4% at $8,070 a tonne at 1126 GMT.
The metal used in power and construction fell from a record high of $10,845 in March to $6,955 in July as economic growth in China and elsewhere slowed, but prices have stuck around $8,000 for more than a week.
With stronger demand forecast for next year, there is little appetite among investors and traders to sell, said Saxo Bank analyst Ole Hansen, but for the time being, copper’s fundamentals remain weak.
“We are stuck in $150 range either side of $8,000,” Hansen said. “A break either way will give the market momentum.”
Analysts at Citi said surging COVID cases in China meant it was unlikely to reopen until at least the second quarter of 2023 and a recovery in the property sector would take time.
“Our near-term base case is for substantial downside in base metal prices over the next 3-6 months, as metals such as copper are pricing a major near-term recovery in demand growth, which is unlikely to materialize,” Citi said.
LME aluminum was up 0.7% at $2,378 a tonne, zinc rose 0.3% to $2,946.50, nickel gained 3.1% to $26,425, lead was up 1.3% at $2,140.50 and tin rose 1.2% to $22,615. (Reporting by Peter Hobson; Additional reporting by Beijing Newsroom; Editing by Shinjini Ganguli)
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