LONDON: Copper extended its recovery on Friday on optimism about a revival in demand in top metals consumer China, as a mortgage rate cut and progress in easing COVID lockdowns lifted sentiment.
Benchmark three-month copper on the London Metal Exchange (LME) gained 0.1% to $9,422 a tonne by 1555 GMT after touching $9,510, its highest since May 6.
The contract was set to gain 3% this week, the first weekly rise since early April.
Copper slumped by about 15% from early March to mid-May on worries about a downturn in China’s economy hitting demand for metals and a possible recession in other major economies amid high inflation.
China cut its benchmark reference rate for mortgages by an unexpectedly wide margin on Friday, its second reduction this year as Beijing seeks to revive the ailing housing sector to prop up the economy.
“Previously the supportive measures for the property market were very targeted, but this is a more visible and widespread supportive signal,” said Xiao Fu, head of commodity market strategy at Bank of China International.
Shanghai authorities’ plans to end a prolonged city-wide lockdown on June 1 appeared to remain on track despite some new COVID-19 cases, supporting the market.
“There’s a step by step plan for reopening in Shanghai and the other parts of the country are doing okay. So the situation seems to be under control now and the market is expecting a rebound,” Fu said.
The most-active June copper contract on the Shanghai Futures Exchange ended daytime trading up 0.8% at 71,900 yuan ($10,774.60) a tonne.
Global primary aluminium output in April was unchanged year on year at 5.599 million tonnes, data showed.
The US dollar was headed for its worst week since early February against major peers, making greenback-denominated metals less expensive for buyers using other currencies. The global zinc and lead markets moved into deficits of 6,300 tonnes and 9,600 tonnes respectively in March from surpluses in February, data showed.