BEIJING: Copper prices touched seven-month highs on Wednesday, supported by supply jitters and bullish demand outlook from China after markets resumed trade following the Lunar New Year holiday.
Three-month copper on the London Metal Exchange was up 0.9% at $9,367.50 a tonne, as of 0758 GMT.
The contract has rallied 12.4% so far this year on bets of demand improvement as China’s reopening borders and slower interest rates hikes by global central banks lifted sentiment.
The most-traded March copper contract on the Shanghai Futures Exchange ended day trade 2.5% higher at a seven-month high of 70,300 yuan ($10,378.68) a tonne.
Copper rally punctured by Chinese growth data
“Infrastructure construction will accelerate after the Chinese New Year,” said Hong Ruishu at Marex Metals, also pointing to the country’s pledge to resolve the risks in real estate, finance, local government debt and other areas.
On the supply side, concerns of worker strikes and political unrest remain in place for 2023 in Chile and Peru, which account for around 30% and 10% of global mining supply, respectively, posing significant upside risk, according to Jefferies Equity Research.
Reuters reported on Tuesday that Glencore Plc’s huge Antapaccay copper mine in Peru is operating at “restricted” capacity due to anti-government protests that saw an attack on the facility last week.
Also supporting the market was a subdued dollar, making it more attractive for non-dollar holders to buy the greenback-priced commodity.
Still, the recent price rally has raised some concerns.
Analysts at Guangda Futures said the market is already overheated and can be easily dragged down once overseas inventories piled up over the Lunar New Year holiday as favorable market conditions have buoyed exports from China.
Among other metals, LME aluminium rose 0.5% to $2,631 a tonne, zinc was up 1.2% at $3,333.50, tin nudged 0.3% higher to $28,500, while lead dipped 0.3% to $2,218.
SHFE nickel added 0.3% at 205,670 yuan a tonne, zinc gained 0.5% to 24,285 yuan, tin climbed 0.7% to 227,510 yuan, and aluminium rose 2% to 18,945 yuan.
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