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LONDON: Copper continued its rally on Wednesday, rising to its highest levels since June as speculators bet that low inventories and rising Chinese demand will lift prices.

Benchmark copper on the London Metal Exchange was up 0.2 percent at $9,305.50 a tonne at 1704 GMT after earlier surging to $9,550.50.

Prices of the metal used in electrical wiring are up around 11 percent this month and nearly 35 percent from a low of $6,955 last July.

Demand is weak and set to stay that way as China’s Lunar New Year holidays begin next week, potentially worsening a wave of COVID-19 infections.

But investors believe the end of China’s zero-COVID policy will enable its economy to bounce back from last year’s slump, boosting its use of metal.

Demand will improve, said BMO analyst Colin Hamilton.

“It (copper) is running a little bit ahead of fundamentals, but there’s just no inventory,” he said.

Chinese bonded warehouses and warehouses registered with the LME and the COMEX and Shanghai Futures exchanges contain around 285,000 tonnes of copper, significantly below levels typical before the coronavirus pandemic.

Also helping is the US dollar, which has weakened 11 percent since September against a basket of major currencies, making dollar-priced metals cheaper for many.

Oil prices and Asian and European shares rose, but US equities fell.

Meanwhile, copper output at Chilean miner Antofagasta fell 10.4 percent in 2022, a source said operations at Peru’s Antapaccay copper mine had been “restricted”, and Chile denied permits for the Dominga copper and iron mining project, raising concerns about supply.

However, analysts at Citi said: “it’s not a great risk-reward from here for base metals bulls.”

“A weak (Chinese) property sector compared with historical activity level is a key concern, unless and until major fiscal and monetary stimulus were to come,” they said.

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Osujaki Elibariki Saitoti Jan 19, 2023 07:17pm
The opening of boundaries in China has really surpassed the growth of different economy and also different product price and it has really been great so far
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