LONDON: Copper prices clambered higher on Wednesday as investors bet the U.S. central bank would not raise rates too quickly, allowing economic growth and metals demand to keep increasing.
Three-month copper on the London Metal Exchange had gained 1.6% to $9,955 a tonne by 1715 GMT, building on its 0.8% rise in the previous session. The U.S. Federal Reserve is expected on Wednesday to signal plans to raise interest rates in March as it focuses on fighting inflation.
“The mood on markets has changed overnight and I think it’s because most market players think the Fed will deliver this evening, but will not over-deliver,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.
“If the Fed acts in a moderate manner, the economy will still continue recovering from its COVID low in 2020, and this supports metals demand in general.”
The upbeat mood lifted equity markets, while oil touched $90 a barrel for the first time in seven years on tension between Russia and Ukraine.
In China, the most-traded copper contract on the Shanghai Futures Exchange finished up 1.3% at 70,730 yuan ($11,192) a tonne.
Signs of near-term physical demand in China, however, were not as rosy. The Yangshan copper premium was last at $62 a tonne, the lowest since August last year and down from $88 a month ago.
LME aluminium rose 0.2% to $3,099 a tonne after climbing by 2.1% on Tuesday on worries that Russia-Ukraine tension would hit supply.
Al Munro at broker Marex said in a note the market was expecting sanctions to be imposed on Russia, but there was not as much scope for gains as in 2018 when prices surged to seven-year highs. “In contrast to the 2018 impact... the market is already at elevated levels.”
LME zinc advanced 1.2% to $3,615 a tonne, nickel climbed 2% to $22,785, tin gained 2.7% to $42,500 while lead was little changed at $2,335.
Comments
Comments are closed for this article.