LONDON: Copper prices hovered around $8,350 a tonne on Wednesday as hopes that China’s easing of COVID-19 restrictions will eventually lift demand were offset by a surge in infections that is reducing consumption in the short term.
China is the biggest consumer of metals such as copper, which is used in the power and construction industries.
Its zero-COVID policy disrupted economic activity and helped pull copper from a record high of $10,845 in March as low as $6,955 in July. The dismantling of restrictions starting in November lifted prices but an accelerating wave of cases is now rippling through business. Dozens of hearses queued outside a Beijing crematorium on Wednesday.
China’s cabinet was quoted as saying it would act in order to improve growth in early 2023.
But the World Bank cut its China growth outlook to 2.7% this year and 4.3% in 2023. Eying China, Japan cut its view on factory output for the first time in six months.
“Copper is in a difficult situation,” said an analyst in Europe who requested anonymity because he does not have permission to talk to media. The market is stuck between weak demand now and hopes for a rebound in the longer term, he said, predicting choppy prices in the short term but a rise above $10,000 next year.
“A sustained recovery of base metals prices is only likely to begin from the middle of next year,” said analysts at Commerzbank.
Benchmark copper on the London Metal Exchange (LME) was up 0.3% at $8,377 a tonne at 1702 GMT. It was up around 1.5% this month after gaining 10.6% in November.
Supporting metals is a dollar heading for its biggest quarterly loss in nearly 12 years against a basket of major currencies, which has made dollar-priced metals more affordable for many buyers.
LME aluminium was up 0.8% at $2,391 a tonne, zinc was down 2.7% at $2,999, nickel rose 3.8% to $29,420, lead added 1.6% to $2,214 and tin was 0.9% higher at $24,135.
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