Copper prices firmed on Thursday as data from China pointed to signs of gradual recovery from the novel coronavirus, but gains were capped by concerns about global growth and falling metals demand.
New home prices in top metals consumer China grew at their slowest annual pace since June 2018, but a pick-up in momentum signalled the coronavirus impact on the property market was fading.
The COVID-19 pandemic has halted economic activity in much of the rest of the world, prompting forecasts for a deep economic recession and demand destruction for metals.
"The short-term outlook is one where these rallies run out of steam because we are still faced with the biggest demand shock in living memory it will take a long time to reset itself," said Saxo Bank analyst Ole Hansen.
Benchmark copper on the London Metal Exchange (LME) gained 0.5% to $5,139 a tonne by 1700 GMT. The metal, used in power and construction, is often seen as a gauge of economic health.
Asia's economic growth this year will grind to a halt for the first time in 60 years as the coronavirus takes an unprecedented toll on the region's service sector and major export destinations, the International Monetary Fund said.
A Reuters survey earlier this week showed that China's economy is expected to grow only 2.5% this year, the slowest annual pace in nearly half a century and a sharp drop from 6.1% last year.
A record 22 million Americans filed for unemployment benefits over the past month, underscoring the epidemic's damage to the world's largest economy.
China reported fewer new coronavirus cases on Thursday that involved travellers arriving from abroad, but said locally transmitted infections rose. Copper stocks in warehouses monitored by the LME eased 400 tonnes to 260,825 tonnes, having nearly doubled from levels at the beginning of the year.
In China, on-exchange stocks have steadily declined from a three-year peak touched in March as production reboots following coronavirus-related shutdowns.
LME aluminium prices gained for a fourth straight session on rising expectations of supply cuts and some improvement in the Chinese market, ING analyst Wenyu Yao said.
Benchmark three-month aluminium added 0.6% to $1,516.50 a tonne, after touching its lowest in over four years last week at $1,455. LME zinc gained 0.7% to $1,944, lead fell 0.4% to $1,695, tin eased 0.4% to $15,040 and nickel eased 0.1% to $11,765.
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