LONDON: News of possible stimulus measures in China on Thursday pushed copper prices up sharply from a 20-month low the day before, but many analysts expect further declines as rising interest rates stifle global economic growth.
Benchmark copper on the London Metal Exchange (LME) was up 4.1% at $7,829 a tonne at 0955 GMT after Bloomberg News reported that China, the biggest metals consumer, was considering measures worth $220 billion.
While the 4.1% rise is the biggest daily gain since February 2021, copper is still down nearly 3% this week and nearly 30% from a high of $10,845 in March.
On Wednesday, prices touched $7,291.50, the lowest since November 2020.
“Copper is most exposed to an economic slowdown and prices could fall below $6,000/t in the coming months in our base case,” analysts at Bank of America wrote in a research note.
LME copper may stabilize around $7,897 this week
“If Europe runs out of gas, a risk, prices could decline to $4,500/t.”
Markets: Global shares rose, but are still down around 20% this year.
Interest Rates: Central bankers are determined to raise rates to bring sky-high inflation under control.
Recession: International Monetary Fund (IMF) head said the economic outlook had “darkened significantly” and could not rule out a possible global recession next year.
Factories: German industrial production rose less than expected in May, adding to a run of weak manufacturing data around the world.
Dollar: The dollar is near 20-year highs and expected to remain strong for at least the next three months, making dollar-priced metals costlier for non-U.S. buyers.
Citi: “A timely and decisive rollout of stimulus measures (over and above what has been announced) from China is required to support prices at current levels,” analysts at Citi said in a note. “Without it, prices will grind lower.”
Prices: LME aluminium rose 0.4% to $2,420 a tonne, zinc was up 3.1% to $3,091, nickel added 2.3% to $22,350, lead was 1.3% higher at $1,995 and tin was up 4.6% at $25,850.
Prices of all the metals except nickel are down sharply this year.