LONDON: Copper prices rose on Friday as top consumer China stepped up measures to support its economy and the metals-intensive property sector. However, a surge in COVID-19 cases in China to record levels and expanding lockdowns in the country are hurting metals demand in the short term.
Benchmark copper on the London Metal Exchange (LME) was up 0.7% at $8,100 a tonne in official open-outcry trading, but roughly unchanged for the week. Prices of the metal used in power and construction have fallen 25% from a high in March as growth in China and elsewhere slowed.
“The market is building a bottom,” said Gianclaudio Torlizzi at consultants T-Commodity, predicting copper would head towards $9,000.
He said investors were too negative on the outlook for copper consumption and inventories were so low that “you don’t need a big increase in demand to push prices up”.
But analysts at Citi said that “amid a return of lockdowns in China and broader weakness in global demand … we instead expect more durable price recoveries later in 2023”.
China’s central bank said it is cutting bank reserve requirements to free up liquidity and sources said it will offer cheap loans to financial firms for buying bonds issued by property developers.
That came after commercial banks pledged at least $162 billion in fresh credit to property developers.
The global copper market was in deficit in the first nine months of this year and copper producer Codelco said the trade would be undersupplied by millions of tonnes in the coming decade.
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Copper inventories in LME-registered warehouses have stabilised around the relatively low level of 90,000 tonnes.
But Shanghai Futures Exchange warehouse stocks fell 18% to 70,249 tonnes in the week to Friday and inventories in Chinese bonded warehouses have dwindled to nothing.
LME aluminium was up 0.3% at $2,380 a tonne, zinc rose 0.5% to $2,931, nickel fell 1.5% to $25,700, lead was up 0.4% at $2,138 and tin was 0.3% higher at $22,300.