LONDON: Copper prices were given a boost on Monday as top metals consumer China cut its bank reserves requirement, fanning hopes for stronger economic growth and industrial metals demand.
Three-month copper on the London Metal Exchange (LME) had gained 1% to $9,509 a tonne by 1700 GMT after trading in the red earlier in the session and having dropped by 0.8% on Friday.
For the second time this year China’s central bank said it would cut the amount of cash that banks must hold as reserves, releasing long-term liquidity to bolster slowing economic growth.
“It’s been expected, but it will certainly stabilise sentiment for growth prospects and help provide support for base metal prices,” said Xiao Fu, head of commodity market strategy at Bank of China International.
“China still has a lot of ammunition to stimulate the economy further, but they will do it in a very measured manner.”
Worries about the global spread of the Omicron coronavirus variant dampened upside momentum, traders said.
Also weighing on the market was a slightly firmer dollar index, making greenback-denominated commodities more expensive for those buying with other currencies.
Long liquidation on the LME zinc market has reduced the net speculative long position to 2.6% of open interest from 5.8% on Nov. 26, said Marex analyst Al Munro.
Global nickel smelting activity rebounded in November, powered by gains in North America and Europe, while refined copper production dipped, data from satellite surveillance showed.
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LME aluminium fell 1.2% to $2,591 a tonne after LME on-warrant inventories rose to 698,550 tonnes, the highest since Sept. 23, having gained 21% in less than a week.
LME zinc slipped 0.1% to $3,160, lead dropped 0.4% to $2,202.50, nickel shed 1% to $19,825 and tin gave up 1.6% to $38,705.
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