LONDON: Prices for copper and other base metals rose in London on Tuesday after the central bank of top metals consumer China lowered a short-term lending rate for the first time in 10 months to prop up its post-pandemic recovery.
Benchmark copper on the London Metal Exchange (LME) was up 1.4% at $8,427 a metric ton by 1105 GMT.
Prices of the metal used in power and construction hit a one-month high of $8,451 a metric ton last week, driven by expectations of a coming Chinese stimulus package.
“The industrial metals sector trades higher after the surprise rate cut from China’s PBOC, raising speculation that a larger economic support package could be unveiled soon, perhaps this week,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Making dollar-denominated metals more attractive to buyers holding other currencies, the dollar fell as investors awaited U.S. inflation data due on Tuesday.
Copper under pressure ahead of China data, Fed decision
The U.S. consumer price index (CPI) could influence the Federal Reserve as it starts its two-day policy meeting, with an interest rate decision due on Wednesday.
Copper trades above the 200-day moving average of $8,384 but needs a break above $8,450, its March and April lows, to attract additional momentum buying, Hansen said, adding that large are unlikely until the CPI and Fed rate decision arrive.
On-warrant copper stocks in LME-registered warehouses registered a daily fall of 275 metric tons to a two-month low of 41,375 tonnes, LME data showed on Tuesday.
Providing support to base metals from the supply side, a fire overnight at Sweden’s Ronnskar smelter - a major producer of copper, zinc, lead and other metals - has halted output until further notice.
LME aluminium advanced 0.3% to $2,234.5 per metric ton, zinc rose 1.5% to $2,385.5, nickel climbed 2.2% to $21,215, tin was up 0.4% at $26,000 and lead fell 0.2% to $2,068.5.
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