LONDON: Copper prices hit two-week peaks on Wednesday as top consumer China’s easing of COVID restrictions spurred buying, but recession risks and expectations of weaker demand capped gains.
Benchmark copper on the London Metal Exchange (LME) traded up 1.4% at $8,470 a tonne in official rings after earlier hitting $8,520, the highest since Dec. 14.
China will stop requiring inbound travellers to go into quarantine from Jan. 8, a major step towards easing curbs on its borders that have been largely shut since 2020.
“The relaxation of China’s zero-Covid-19 restrictions have lifted the market mood much more than they will lift demand and the property market is unlikely to see a rapid recovery,” said Julius Baer analyst Carsten Menke.
“Growth elsewhere should not be strong enough to offset China’s softness, suggesting that 2023 will be another cyclically challenging year for copper and industrial metals more broadly.” Spikes in China’s COVID cases and the Lunar New Year holiday next month are expected to dampen metals demand, though supply concerns could lend some support.
The focus is on a dispute about taxes between Panama’s government and First Quantum Minerals that has halted operations at its Cobre Panama mine, which produced 331,000 tonnes of the copper last year.
Elsewhere, lead prices hit $2,302.50 a tonne, the highest since May 5 on worries about supplies and dwindling stocks of the battery material in LME approved warehouses, which at 25,000 tonnes are near 15-year lows.
Cancelled warrants – metal earmarked for delivery – at 39% of the total and large holdings of warrants and cash contracts suggest more lead is due to be delivered out.
The scramble for lead has also created a hefty premium for the cash over the three-month lead contract. The premium hit a one-year high of $49 a tonne on Friday.
Three-month lead was down 0.3% at $2,266 a tonne and zinc gained 2.3% to $3,033 also because of low stocks in LME warehouses.
Aluminium slipped 0.6% to $2,376, tin gained 3% to $24,650 and nickel rose 4.5% to $30,875.