LONDON: Prices of copper and most other base metals continued to recover from multi-month lows on Wednesday as strong US corporate earnings and an easing of gas supply fears in Europe boosted risk appetite and global stock markets. A weaker US dollar in recent days has also helped metals, which are priced in the greenback, by making them cheaper for buyers with other currencies.
Metals and equities had plunged in recent months and the dollar reached 20-year highs as sky-high inflation and fast-rising interest rates pushed many countries towards recession.
“In the very short term, almost everything looks oversold and very susceptible to a relief rally,” Macquarie analyst Marcus Garvey said of metals.
But he said weak economic growth had worsened the outlook for metals usage: “It’s a sell-the-rallies situation until we see something better on the demand side.” Benchmark copper on the London Metal Exchange (LME) was up 1.1% at $7,360.50 a tonne at 1658 GMT, taking gains from last Friday’s low to around 6%.
However, prices are still down more than 30% from a record high in March.
US existing home sales fell for a fifth straight month in June.
Investors now expect a 75-basis-point US interest rate rise next week rather than a 100-basis-point increase that would have been more damaging to economic growth.
But European Central Bank policymakers are mulling a bigger-than-expected 50-basis-point rate rise on Thursday.
China, the biggest metals consumer, does not face recession but COVID-19 restrictions have curtailed industry and property developers are struggling to stave of default.
On the copper supply side, Chilean miner Antofagasta cut its full-year output target to 640,000-660,000 tonnes. However, many analysts expect copper supply to grow strongly through 2023.
LME aluminium was 1.3% higher at $2,420 a tonne, zinc rose 1.7% to $2,998, nickel gained 2.8% to $21,180 and lead added 2% to $2,025.50. Tin was almost unchanged at $24,800.
Most of the metals are down 25-50% from highs in March.
Source: Brecorder
