LONDON — Copper prices on Friday touched their highest since June as investors anticipated that China’s easing of coronavirus restrictions will boost economic growth and metals demand.
The yuan meanwhile rose to its strongest since September, helping dollar-priced metals by making them cheaper for buyers in the world’s biggest commodities market.
With China abandoning key parts of its zero-COVID policy this week, the country’s economic growth will keep picking up pace, state media CCTV quoted Premier Li Keqiang as saying.
Economists expect new yuan loans to have rebounded in November and state support for the metals-intensive property market helped push Chinese stock markets sharply higher.
Benchmark copper on the London Metal Exchange (LME) rose to $8,618, the highest since June 23, before slipping to $8,524 in official trading, down 0.2%.
Prices of the metal used in power and construction are up around 3.5% this month after jumping 10.6% in November.
“A lot of it is to do with projections of future demand if China does continue to ease its COVID policies,” said WisdomTree analyst Nitesh Shah, predicting that prices would continue to rise.
“Manufacturing demand will pick up,” he said. “People are looking beyond recession and towards recovery.”
Weak growth does still hang over markets, however, with investment banks expecting the global economy to slow further in 2023 and the U.S. Federal Reserve and the European Central Bank expected to raise interest rates next week.
But expectations that U.S. rate rises will slow have already sharply weakened the dollar, giving a boost to metals.
Visible copper inventories
LME aluminum was down 0.6% at $2,487.50 a tonne, zinc fell 0.6% to $3,217, nickel rose 0.9% to $30,000, lead was up 0.4% at $2,220 and tin fell 0.2% to $24,575.
All except aluminum were heading for weekly gains. (Reporting by Peter Hobson; Editing by Kirsten Donovan)