LONDON: Copper extended its rebound on Friday as fears of a global recession eased and investors focused on low inventories and threats to supply.
Three-month copper on the London Metal Exchange (LME) climbed 1.4% to $7,839 a tonne in official open-outcry trading, building on the previous session’s 0.7% gain.
Copper has recovered from three days of losses prompted by weak global factory data and flaring U.S.-China tensions after U.S. House of Representatives Speaker Nancy Pelosi’s visit to Taiwan.
The metal used in power and construction has shed 28% since touching a record peak of $10,845 in March.
“To produce a crash in prices, a global recession would have to be synchronised, but we’re not seeing that. Just Europe is in recession while China has been stabilising,” said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.
Chinese authorities are pumping stimulus spending into the economy and launching metals-intensive infrastructure projects to lift economic growth.
The most-traded September copper contract on the Shanghai Futures Exchange advanced 1.5% to 60,310 yuan($8,938.66) a tonne.
U.S. jobs data later on Friday is expected to show slower growth in employment but strong enough to provide evidence that the economy was not in recession.
“The tightness of supply is much higher than two years ago, so my bet is that there’s the risk of a squeeze in the fourth quarter,” Torlizzi added.
Metals consumers who have been waiting for lower prices will scramble to restock when they realise prices have stabilised, he added.
Most LME inventories are at historically low levels. Copper stocks, at 128,600 tonnes, have shed nearly 30% since mid-May.
Prices of other metals were mostly firmer. LME aluminium climbed 1.5% to $2,440 a tonne, lead advanced 1.4% to its highest since June 21 at $2,073.50 and tin gained 0.5% to $24,675.
Nickel was little changed at $22,205 while zinc slipped by 0.3% to $3,440.