LONDON: Copper prices edged higher on Friday as low inventories and hopes for economic recovery next year offset a slackening in near-term demand in China caused by a surge in COVID-19 cases.
Benchmark copper on the London Metal Exchange (LME) was up 0.5% at $8,352 a tonne at 1700 GMT and up around 1% this week.
While some analysts expect the metal used in power and construction to rise towards record highs of $11,000 in 2023, weakening economic growth has this year pulled prices down 14%.
“Demand is not there,” said Robert Montefusco at broker Sucden Financial.
Copper could move higher in early 2023 but this would require more economic stimulus in China - the top consumer - and an improvement of sentiment on wider markets, he said.
China expects a peak in COVID-19 infections within a week, a health official said, as authorities predict extra strain on the health system and the virus ripples though business.
Global equities have fallen about 20% in 2022.
Copper inventories remain low, giving the market little to draw on if demand improves. Stockpiles in Shanghai Futures Exchange (ShFE) warehouses fell by 9,472 tonnes to 54,569 tonnes in the week to Friday.
Benchmark LME zinc rose 0.9% to $2,973.50 a tonne as inventories in ShFE and LME warehouses - at 18,173 tonnes and 36,350 tonnes respectively - slumped to their lowest on record. Still, the metal used to galvanise steel is down around 1.2% this week and around 15% this year.
A bottleneck in smelting should ease, flipping the market from a 220,000 tonne deficit this year to a small surplus in 2023, said Citi analyst Tom Mulqueen.
“Tight zinc supply from European smelters and concern over low global inventory levels will in the short term offer some support,” he said. “However, we then see a further decline to $2,700 a tonne by Q3 2023.” LME aluminium was down 0.9% at $2,383.50 a tonne, nickel rose 0.8% to $29,470, lead climbed 2.4% to $2,268.50 and tin was up 0.3% at $24,000.
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