LONDON: Copper prices paused their rally on Friday but were set to end the week with a 7% gain thanks to a weaker dollar and hopes that China’s dismantling of COVID-19 restrictions will lift demand.
Other industrial metals were also on course for hefty weekly gains, with aluminium, zinc and tin up by between 10% and 14% from last Friday.
Benchmark copper was roughly unchanged on the day at $9,190.50 a tonne by 1700 GMT, retreating from Thursday’s seven-month high of $9,240.
China’s zero-COVID policy stifled metals demand in the world’s biggest metals consumer. The abandonment of the policy has caused a wave of COVID-19 infections likely to last for two to three months.
“(But) most investors are looking through that turbulence at the potential for Chinese copper demand to move markedly upwards,” said WisdomTree analyst Nitesh Shah.
“Above $10,000 (a tonne) should be easily in reach,” he said, adding that copper supply is likely to remain tight this year.
A Chinese official on Friday pledged further support from the central bank for manufacturers and small companies.
China’s 2023 copper consumption is projected to rise 4.4% to 14.8 million tonnes, Fitch Solutions Country Risk and Industry Research said.
However, near-term demand remains lacklustre, with stocks of copper, aluminium, zinc and lead in Shanghai Futures Exchange warehouses rising sharply in the week to Friday.
The dollar dropped to its weakest since June after a slowdown in US inflation bolstered expectations that US interest rate rises will end soon.
The weaker dollar makes dollar-priced metals cheaper for buyers with other currencies.
Benchmark zinc was up 2.5% at $3,317.50 a tonne as stockpiles in LME-registered warehouses fell to 20,975 tonnes, the lowest on record and down from almost 300,000 tonnes in early 2022. LME tin rose 5.4% to $28,900 after a major mine in Peru suspended operations.
LME aluminium was 2.4% up at $2,610.50 a tonne, nickel fell 0.9% to $26,765 and lead rose 2.2% to $2,247.