LONDON — Copper prices drifted higher on Friday, waiting for Chinese markets to reopen and provide clarity on how soon the demand for metals will lift after the country dismantled strict COVID-19 controls.
Three-month copper on the London Metal Exchange rose 0.4% to $9,368 a tonne by 1045 GMT in thin volume.
Cooper has been flat this week during a closure of markets in top metals consumer China for the Lunar New Year holiday, but has rallied by 12% so far this year. The Shanghai Futures Exchange will reopen on Monday.
The gains are largely due to bullish investors betting the reopening of the world’s second-largest economy will spur economic activity and metals demand.
“My guess is that the market has a lot of upside left. There’s no crowded long trade, currently the positions are very light so there’s still space to increase that,” said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.
He rejected views of some analysts and investors, who say the market has overshot because physical demand is currently weak and any recovery will take time.
“People are underestimating the China reopening because they are looking with a Western lens. I’m old enough to know that when the Chinese decide to accelerate their economy, they manage to do it,” Torlizzi said.
Financial markets also received encouragement from reassuring U.S. economic and inflation data on Thursday.
Low inventories have also been supporting the market, with LME copper stocks
Supply issues have been in focus, with output growth in top producer Chile expected to slow, a government report showed this week.
Among other metals, LME aluminum added 0.3% to $2,646.50 a tonne, nickel rose 0.7% to $29,620, tin advanced 0.4% to $32,390, while zinc was unchanged at $3,486.50 and lead fell 0.4% to $2,195.
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(Reporting by Eric Onstad; Editing by Krishna Chandra Eluri)