LONDON: Copper prices fell on Friday but was still up 6.6% over the first quarter as demand in top consumer China recovered from last year’s slump, with many analysts predicting further gains to come.
The metal used in electrical wiring hit a seven-month high of $9,550.50 a tonne in mid-January but lost ground as U.S. interest rates rose and China’s rebound proved less rapid than forecast.
Worries that turmoil in the banking sector will hinder economic growth have also pressured metals in recent weeks.
Benchmark copper on the London Metal Exchange (LME) was down 0.9% at $8,924 a tonne by 1102 GMT but on track for its second consecutive quarterly gain.
Data on Friday showed that Chinese factory growth slowed in March. The numbers beat expectations but highlighted doubts about the strength of China’s post-COVID manufacturing recovery.
Chinese Yangshan copper import premiums, meanwhile, have fallen to $35.50 a tonne from $50 in mid-March, suggesting lacklustre demand for overseas metal.
Copper claws higher on Chinese demand, softer dollar
However, copper inventories in warehouses monitored by the Shanghai Futures Exchange fell again in the week to Friday and stocks in the LME and COMEX exchange systems are low by historical standards.
“The fundamentals look strong,” said WisdomTree analyst Nitesh Shah, predicting that China’s economic recovery and a global shift towards copper-intensive electrification would boost demand.
Prices should rise beyond January’s highs in the third quarter, by which time U.S. interest rates may be falling, Shah said.
“Improving demand from China, depleted global inventories and constrained supply will keep industrial metals relatively resilient to any mild macroeconomic headwinds,” said ANZ analysts.
In other metals, LME aluminium was up 0.2% at $2,391 a tonne, zinc fell 1.8% to $2,880.50, nickel rose 0.8% to $23,390, lead slipped 0.8% to $2,122.50 and tin edged down 0.3% to $25,850.
Tin was heading for a small quarterly gain while aluminium was little changed and zinc, nickel and lead were down.
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