LONDON: Copper prices rose on Monday, helped by a weakening dollar that made metals cheaper for buyers with other currencies, but prices remained near 20-month lows as slowing economic growth clouded the demand outlook.
Benchmark copper on the London Metal Exchange (LME) was up 0.4% at $7,481 a tonne at 1600 GMT.
Prices of the metal used in power and construction are up about 7.5% from a low of $6,955 on July 15 but down more than 30% from a record high in March. To rein in inflation, central banks worldwide have begun rapid interest rate increases that are likely to stifle economic growth.
Demand has also been weak in China, the biggest consumer, because of COVID-19 lockdowns.
“We probably are close to the trough for most metals,” said Capital Economics analyst Caroline Bain. “Yes, the demand outlook has deteriorated, but it’s not all bad on the China front.” Speculative investors are becoming less bearish, cutting their net short position in COMEX copper to about 14,500 contracts from around 26,500 in early July. In a hopeful sign for metals, China will launch a fund worth up to 300 billion yuan ($44 billion) to help to ease a debt crisis in the property industry, a state bank official told Reuters.
“Industrial activity in China is improving,” ANZ analysts said. “Nevertheless, ongoing outbreaks of COVID are raising uncertainty over the demand recovery.” The roughly 25 million tonne a year global copper market was oversupplied by 43,000 tonnes over January-May, according to the International Copper Study Group (ICSG).
But copper stocks in exchange warehouses are low, with only 50,350 tonnes in the Shanghai Futures Exchange (ShFE) system, near last year’s 12-1/2 year low of 27,171 tonnes. LME aluminium was down 2.8% at $2,406.50 a tonne, zinc fell 0.3% to $2,985, lead slipped 0.4% to $2,010 and tin was 1.4% down at $24,605. Nickel, however, rose 0.1% to $22,135.