LONDON: Copper prices touched their highest in over three weeks on Tuesday on hopes that lifting China’s lockdown restrictions will boost demand, but a stronger dollar chipped away at the gains.
Three-month copper on the London Metal Exchange was little changed at $9,540 a tonne by 1037 GMT, after earlier hitting its highest since May 5 at $9,591.50.
U.S. Comex copper gained 0.8% to $4.34 a lb.
Shanghai authorities removed lockdown fences on Tuesday, preparing to lift a two-month lockdown at midnight, while China’s cabinet announced a package of 33 stimulus measures to revive its pandemic-ravaged economy.
“The news from China is just enough to create a refocus in the market towards a possibility of a pick up in demand,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“If we haven’t seen it already, we’re very close to having seen a bottom in industrial metals, where we can bounce.”
Copper slid 18% during about two months after touching a record high of $10,845 a tonne in early March on fears about a slowdown in China and inflation disrupting economies elsewhere.
In May, LME copper is on track for its second monthly decline with a drop of 2.2%.
But weak inventory levels were a sign of underlying strength in the market, Hansen added.
“It’s quite telling that despite worries about growth and demand there hasn’t been a pick-up of inventory levels at a time of year when you would expect some stock build.”
Data showed China’s factory activity contracted at a slower pace in May, as restrictions on some plants were lifted.
The dollar rose against its rivals, making greenback-denominated metals more expensive for buyers using other currencies.
LME tin added 0.6% to $34,790 a tonne but was set to tumble 13.6% in May, its worst monthly performance since 2012.
LME aluminium shed 1% to $2,860 a tonne and nickel dropped 2.3% to $28,600, but zinc rose 1.2% to $3,948.50 and lead was slightly firmer at $2,175.50.