LONDON: Copper prices gained on Wednesday as slowing COVID-19 infections in top metals consumer China eased near-term demand concerns, although enduring lockdowns limited enthusiasm.
Shanghai said half the city had achieved “zero-COVID” status, but uncompromising restrictions had to remain in place under a national policy.
Lockdowns in China and worries over aggressive U.S. interest rate hikes this year have weighed on base metals, with copper hitting its lowest in nearly five months this week.
Beijing’s reluctance to inject economic stimulus to bolster demand would continue to weigh on metals, said Caroline Bain, senior commodities economist at Capital Economics.
“The lockdowns in China have been the final nail in the coffin for demand. It has exposed how subdued demand has been,” Bain said.
Benchmark copper on the London Metal Exchange (LME) was up 1.4% to $9,359 per tonne at 1043 GMT.
China April copper imports fall 4% on year on weaker demand
Logistics: China’s COVID-19 outbreak is suppressing the country’s use of cobalt, nickel and lithium by disrupting transportation and cutting battery manufacturing, state-backed research house Antaike said.
Demand: China’s overall vehicle sales for April plunged almost 48% from a year earlier as the lockdowns hit factories and showrooms, but sales of electric vehicles surged and Chinese brands took share from global rivals.
Copper: China’s April copper cathode output fell on both a monthly and annual basis, state-backed research house Antaike said on Tuesday, as maintenance and the COVID-19 outbreak curbed smelters from producing more metal.
Inflation: China’s factory-gate inflation eased to a one-year low in April, giving policymakers headroom for more stimulus to shore up a flagging economy.
Dollar: At a near two-decade high, the dollar makes metals and other assets it is priced in more expensive for buyers holding other currencies.
Column: Bear funds flex muscles on copper as macro outlook darkens: Andy Home.
Prices: LME aluminium gained 0.5% to $2,769 a tonne, zinc rose 1.3% to $3,645, lead was steady at $2,112, tin was barely changed at $35,530, while nickel fell 2% to $27,835.