METALS-China demand optimism propels copper to 5-month high
Reuters
Monday November 14, 2022 07:02
(Updates prices, adds comment)
By Pratima Desai
LONDON, Nov 14 (Reuters) - Copper prices hit near
five-month highs on Monday on optimism about demand in top
consumer China after officials moved to shore up the country's
property sector and ease its strict COVID restrictions.
However, selling spurred by a firmer dollar, higher
inventories and profit-taking saw copper prices later retreat. Benchmark copper on the London Metal Exchange was
down 1.4% at $8,373 a tonne at 1702 GMT from an earlier $8,600 a
tonne, the highest since June 23.
China's easing of COVID-19 restrictions included shortening
quarantines by two days for close contacts of infected people
and for inbound travellers but a full dismantling of COVID
controls may be a long way off.
"Relaxed protocols for COVID prevention helped start the
rally last week," said Giles Coghlan, analyst at broker HYCM.
"The announcement of the 16 point property support plan is
further good news supporting a return to demand for copper and
underpinning prices."
A notice to financial institutions from Chinese regulators
outlined steps to support the industry, including loan repayment
extensions, in a major push to ease the deep liquidity crunch
which has plagued the property sector since mid-2020.
Meanwhile, receding worries about copper supply on the LME
market due to rising stocks weighed on prices, while the premium
for the cash over the three-month contract has
retreated to near zero from $135 a tonne only three weeks ago.
Latest data shows copper stocks in LME
registered warehouses rose 8,925 tonnes to 86,800 tonnes.
Cancelled warrants - metal earmarked for delivery - at 28% are
down from 66% since Oct. 26.
Copper prices were also buffeted by a higher U.S. currency,
which when it rises makes dollar-priced metals more expensive
for holders of other currencies. In other metals, aluminium was down 1.4% at $2,430 a
tonne after the LME's decision not to ban Russian metal from
being traded and stored in its system.
"How much further pressure we will see on metals prices
going forward will depend on whether we see a significant inflow
of Russian metals into LME warehouses in the weeks and months
ahead." analysts at ING said.
Zinc was up 2.7% at $3,108, lead rose 1.1%
to $2,186, tin gained 0.9% to $21,500 and nickel gained 1.0% to $27,200.
Nickel earlier jumped 15% to $30,960 a tonne, the highest
since May as funds and traders reversed bets on lower prices in
an illiquid market ahead of contract settlement on Wednesday.
(Reporting by Pratima Desai; editing by Emelia
Sithole-Matarise, Kirsten Donovan and Sandra Maler)
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