Copper hits 6-1/2 month peak on hopes for China demand

Copper hits 6-1/2 month peak on hopes for China demand

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LONDON, Jan 10 (Reuters) –

Copper prices extended their gains on Tuesday, touching the highest in 6-1/2 months as investors bet the reopening of China combined with fresh stimulus will fuel metals demand.

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Three-month copper on the London Metal Exchange (LME) climbed 0.8% to $8,926 a tonne by 1710 GMT, the highest since June 22 and the fourth session of gains.

“This could turn out to be a very good year for metals – the reopening of China is potentially happening even faster than one would have imagined,” said Ole Hansen, head of commodity strategy at Saxo Bank.

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Earlier in the session, bullish investors took profits as the market struggled to break through key resistance at $8,900, Hansen said, but in the afternoon that barrier was breached, triggering further gains.

The rally in copper and other base metals has been driven by China’s reopening of its borders after years of COVID-related restrictions.

The market also got a boost after

new bank lending in China last month rose unexpectedly from November as the central bank continued to support the COVID-ravaged economy.

The December lending data released on Tuesday pointed to further growth in 2023, Iris Pang, chief China economist at ING Bank, said in a note.

“Loan growth could be strong in 2023 if the government relaxes ‘the three red lines’ financial leverage indicators for real estate developers. In short, 2023 will be a year of re-leveraging.”

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LME futures saw gains despite expectations that physical demand for metals will slow as China enters its week-long holiday to celebrate the Lunar New Year over Jan. 23-27.

The Yangshan copper premium , which indicates demand for imported copper into China, was quoted at $37.50 a tonne on Monday, down from $152.50 a tonne less than three months earlier.

Among other metals, LME aluminum added 1.1% to $2,464 a tonne, nickel edged up 0.2% to $27,500, tin rose 0.2% to $25,910, but zinc eased 1.1% to $3,172 and lead dropped 2.7% to $2,190.

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($1 = 6.7855 yuan) (Reporting by Eric Onstad Additional reporting by Mai Nguyen in Hanoi Editing by David Evans, David Goodman and Chris Reese)


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