LONDON — Copper prices rose on Tuesday as
a weaker dollar reinforced hopes for stronger demand after top
consumer China relaxed its COVID-19 quarantine rules, though
gains were capped by concerns over the global economy.
Benchmark copper on the London Metal Exchange (LME)
traded up 1% at $8,500 a tonne in official rings. Prices of the
metal viewed by investors as a gauge of economic health had
touched $8,122.50 on Friday, the lowest since February 2021.
“China’s hard lockdowns have hit manufacturing activity and
industrial metals demand,” said Julius Baer analyst Carsten
Menke. “Markets fear economies can’t cope with this mix of high
inflation and tightening monetary policy.”
COVID: China will halve to seven days its COVID-19
quarantine period for overseas visitors, with a further three
days spent at home.
The country’s state planner also boosted sentiment by saying
it would roll out tools in its policy reserve in a timely way to
cope with economic challenges.
Clues to Chinese demand for industrial metals will come
later this week from surveys of purchasing managers in the
DOLLAR: A weaker U.S. currency makes dollar-priced metals
cheaper for holders of other currencies, which tends to boost
demand. This relationship is used by funds to generate buy and
sell signals from numerical models.
GROWTH: Rising inflation and interest rates have fueled
worries about a global economic recession.
SPREADS: Concerns over low zinc stocks in LME-registered
warehouses have eased. This can be seen in the narrowing premium
for cash metal over the three-month zinc contract
last at $66 a tonne compared with more than $200 last week.
But zinc availability on the LME remains a problem as
canceled warrants — material earmarked for delivery — at 77% of
the total indicate that more metal is due to leave LME
warehouses over coming weeks .
Three-month zinc rose 1.7% to $3,376 a tonne.
OTHER METALS: Aluminium was up 1% at $2,519.5, lead
was down 0.5% at $1,994, tin gained 2.4% to
$27,650 and nickel jumped 4.5% to $23,915.
(Reporting by Pratima Desai
Additional reporting by Brijesh Patel in Bengaluru
Editing by Vinay Dwivedi and David Goodman