LONDON: Copper prices climbed to five-week highs on Monday after the lifting of COVID lockdowns in top consumer China boosted demand prospects while dwindling inventories provided further support.
Benchmark copper on the London Metal Exchange (LME) had gained 2.5% at $9,735 a tonne at 1613 GMT, having earlier touched its highest since April 27 at $9,916.19.
“China has slowly been reopening and has been announcing policy measures to support the economy... the market appears to continue to be pricing in a further rebound in Chinese activity over the coming months,” said Citi analyst Max Layton.
“We agree with this directionally but remain cautious as we still believe a timely and decisive rollout of stimulus measures, over and above what has been announced, from China is required to support prices at current levels.”
CHINA: Beijing and Shanghai have been returning to normal in recent days after two months of isolation.
STIMULUS: China’s cabinet last week announced a package of 33 measures covering fiscal, financial, investment and industrial policies to revive its pandemic-ravaged economy.
China’s central bank, meanwhile, said it will strengthen the implementation of its prudent monetary policy and bring forward steps to support the economy.
INVENTORIES: Stocks of copper in LME-registered warehouses, at 140,975 tonnes, have dropped more than 20% since the middle of May.
Cancelled warrants - metal earmarked for delivery - at 34% indicate that more metal is due to leave the LME system.
TECHNICALS: Support for copper comes in around $9,700, where the 200-day moving average currently sits, and resistance to higher levels comes from the 50-day moving average at about $9,840.
DOLLAR: Support for industrial metals also comes from a weaker US currency, which makes dollar-priced commodities cheaper for holders of other currencies.
OTHER METALS: Aluminium was up 2.2% at $2,787 a tonne, zinc rose 0.1% to $3,867, lead gained 2.5% to $2,224, tin added 1.8% to $35,550 and nickel jumped 6% to $29,800.
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