LONDON: Copper prices edged lower on Friday but were still up about 7.5% 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 US 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 0.1% at $8,994.50 a tonne at 1610 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.
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 US 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.
Chile’s Codelco, the world’s largest copper producer, said it expects to roughly maintain copper production levels in 2023 after a 10.6% year-on-year drop in 2022.
In other metals, LME aluminium was up 1.2% at $2,415 a tonne, zinc fell 0.4% to $2,920, nickel rose 2.4% to $23,750, lead slipped 1.3% to $2,111 and tin was roughly unchanged at $25,910.
Over the quarter, tin and aluminium were heading for small gains, while zinc, nickel and lead were down.
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