LONDON: Copper prices inched higher on Friday but were set to end the week slightly lower as traders balanced hopes for solid demand in China with pessimism about the global economy.
Inflation data in Germany and Japan released on Friday and statements from European and US central bankers this week suggest that rapid, economically damaging interest rate rises will continue. Investors turned cautious, pushing down global equities and driving up the US dollar - pressuring dollar-priced metals by making them costlier for buyers with other currencies.
However, China, the biggest metals consumer, is widely expected to lower its benchmark lending rates on Monday and has pledged other stimulus to support its economy. China’s Yangshan copper import premiums surged to $107 a tonne from less than $10 in March, suggesting greater appetite for overseas metal.
Copper stocks in Shanghai Futures Exchange (ShFE) warehouses fell to 31,205 tonnes on Friday from 41,811 tonnes a week earlier. Traders were also wary that COVID-19 lockdowns and energy rationing in some parts of China could impact metals production. Rationing has shut some zinc smelters, said consultants CRU.