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LONDON: Copper and aluminium prices rebounded on Wednesday as investors bet that stronger-than-expected economic data from top metals consumer China foreshadowed an uptick in demand.

Three-month aluminium on the London Metal Exchange had gained 1.7% to $2,614.50 a tonne at 1600 GMT after slipping 2.2% on Tuesday and hitting its lowest level since Nov. 10.

LME aluminium has shed 37% since hitting a record high of $4,073.50 on March 7.

“We’re seeing some of the Chinese numbers improving and I think the worst is over. We could see some volatility, but overall the broad trend is geared towards recovery,” said Xiao Fu, head of commodity market strategy at Bank of China International in London.

“The question is how far the rally can go. There seems to be a cap on the upside for now because of the rate hikes by global central banks and worry about slower economic growth globally.”

LME copper edged up 0.1% to $9,235 a tonne.

China’s economy showed signs of recovery in May after slumping in the prior month as industrial production rose unexpectedly, while car sales jumped 54% in the week of June 6 versus the same period in May.

“The industrial production beat suggests China has become very agile at keeping the export engines revving despite mobility restrictions,” said Stephen Innes, managing partner at SPI Asset Management.

Also supporting metals was a weaker dollar index, making commodities priced in the US currency cheaper for buyers using other currencies.

China’s monthly production of aluminium reached a record high in May following easing in power consumption curbs and as COVID-19-induced lockdowns had little impact on output.

Aluminium stocks in LME-registered warehouses fell to a fresh 21-year low of 416,125 tonnes, compared with nearly 2 million tonnes in March 2021.

Stocks in warehouses monitored by the Shanghai Futures Exchange have dropped more than 20% since the middle of March to 269,583 tonnes.

LME zinc rose 1.4% to $3,647 a tonne, lead added 0.8% to $2,091, nickel climbed 2.2% to $25,815 and tin jumped 4% to $32,330.

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