LONDON: Copper extended its recovery on Friday on optimism about a revival of demand in top metals consumer China after a mortgage rate cut and further progress in lifting COVID lockdowns.
Benchmark three-month copper on the London Metal Exchange (LME) gained 0.8% to $9,490 a tonne by 1035 GMT, its highest since May 6. The contract was up 3.3% so far this week.
Copper slumped by about 15% from early March to mid-May on worries about a downturn in China’s economy hitting metals demand and a possible recession in other major economies amid high inflation.
China cut its benchmark reference rate for mortgages by an unexpectedly wide margin on Friday, its second reduction this year as Beijing seeks to revive the ailing housing sector to prop up the economy.
“Previously the supportive measures for the property market were very targeted, but this is a more visible and widespread supportive signal,” said Xiao Fu, head of commodity market strategy at Bank of China International.
Copper prices fall on US Fed pledge for high rates
Also, the market was buoyed because plans by Shanghai authorities to end a prolonged city-wide lockdown on June 1 appeared to remain on track despite some new COVID-19 cases.
“There’s a step by step plan for reopening in Shanghai and the other parts of the country are doing okay. So the situation seems to be under control now and the market is expecting a rebound,” Fu said.
The most-active June copper contract on the Shanghai Futures Exchange ended daytime trading up 0.8% at 71,900 yuan ($10,774.60) a tonne.
Global primary aluminium output in April was unchanged year on year at 5.599 million tonnes, data showed.
The U.S. dollar headed for its worst week since early February against major peers, making greenback-denominated metals less expensive for buyers using other currencies.
Peru’s prime minister on Thursday failed to broker a deal with indigenous communities to allow for the restart of operations at MMG Ltd’s Las Bambas copper mine.
LME aluminium gained 1.7% to $2,957 a tonne, zinc rose 0.8% to $3,743.50, lead climbed 3.7% to $2,140, tin gained 1.8% to $34,850, but nickel slipped 1.4% to $27,845.