China’s reopening helps propel copper to 6-month high

LONDON: Copper prices on Monday hit their highest in more than six months on an improving outlook for demand after top consumer China reopened its borders, while a lower dollar reinforced positive sentiment.

Fund managers tracking commodity indices and rebalancing their holdings to target weights were also behind gains in aluminium, zinc and lead.

Benchmark copper was up 1.9% at $8,752 a tonne at 1046 GMT after hitting $8,801, the highest since June 22.

After three years, China opened sea and land crossings with Hong Kong and ended a requirement for incoming travellers to quarantine, dismantling a final pillar of a zero-COVID policy that had cut the country off from the rest of the world.

Copper hits 3-week high on China hopes

“China reopening gathering pace is adding fuel to the fire that post New Year’s there will be a demand pick-up at a time of low inventories,” a metals trader said, adding that a weaker U.S. currency would also help demand for dollar-priced commodities.

The dollar was near its lowest in seven months against other major currencies after data last week suggested the Federal Reserve could slow the pace of its rate hikes, which is also a plus for metals markets.

Stocks of aluminium in LME registered warehouses are heading towards 22-year lows hit in August last year.

Zinc stocks at 22,850 are at their lowest since August 1989, while lead stocks at 25,775 tonnes are near 15-year lows hit in November.

Cancelled lead warrants – metal earmarked for delivery– are at 64%, indicating more lead is due to leave LME warrant.

For aluminium and zinc, cancelled warrants stand at 52% and 46%, respectively.

Commodity index rebalancing also means selling of the LME’s nickel contract as it rose 44% last year.

However, nickel was up 1% at $28,370 a tonne because, traders say, speculators had been selling ahead of the rebalancing. It fell 6.5% last week.

In other metals, aluminium was up 3% at $2,364, zinc climbed 3.7% to $3,137, lead advanced 3.6% to $2,279 and tin added 2.1% to $25,800.