COPPER prices hit near five-month highs yesterday on optimism about demand in top consumer China after officials moved to shore up the country’s property sector and ease its strict Covid restrictions.
However, selling spurred by a firmer dollar, higher inventories and profit-taking saw copper prices later retreat.
Benchmark copper CMCU3 on the London Metal Exchange was down 1.4 percent at $8 377 a tonne at 11:42 GMT from an earlier $8 600 a tonne, the highest since June 23.
China’s easing of COVID-19 restrictions included shortening quarantines by two days for close contacts of infected people and for inbound travellers but a full dismantling of Covid controls may be a long way off.
“Relaxed protocols for Covid prevention helped start the rally last week,” said Giles Coghlan, analyst at broker HYCM.
“The announcement of the 16 point property support plan is further good news supporting a return to demand for copper and underpinning prices.”
A notice to financial institutions from Chinese regulators outlined steps to support the industry, including loan repayment extensions, in a major push to ease the deep liquidity crunch which has plagued the property sector since mid-2020.
Meanwhile, receding worries about copper supply on the LME market due to rising stocks weighed on prices, while the premium for the cash over the three-month contract CMCU0-3 has retreated to near zero from $135 a tonne only three weeks ago.
Latest data shows copper stocks MCUSTX- TOTAL in LME registered warehouses rose 8,925 tonnes to 86,800 tonnes. Cancelled warrants- metal earmarked for delivery – at 28 percent are down from 66 percent since October 26.
Copper prices were also buffeted by a higher US currency, which when it rises makes dollar- priced metals more expensive for holders of other currencies.
In other metals, aluminium CMAL3 was down 0.3 percent at $2 456 a tonne, zinc CMZN3 was up 1.6 percent at $3 073, lead CMPB3 rose 0.4 percent to $2 171, tin CMSN3 was flat at $21 315 and nickel CMNI3 gained 1.2 percent to $27 250.
Nickel earlier jumped 15 percent to $30 960 a tonne, the highest since May as funds and traders reversed bets on lower prices in an illiquid market ahead of contract settlement on Wednesday. Reuters