Make Kitco Your Homepage

METALS-Copper heads for weekly gain as China optimism builds

Kitco News

(Updates prices) LONDON, March 3 (Reuters) - Copper prices on Friday headed for their biggest weekly gain since early January as strong economic data in top consumer China raised demand hopes.

Benchmark copper on the London Metal Exchange (LME) was roughly unchanged at $8,956.50 a tonne at 1717 GMT and up around 2.8% for the week.

Prices hit a seven-month high of $9,550.50 in January but stalled amid slack Chinese demand and expectations that the U.S. Federal Reserve will raise interest rates further, dampening economic growth and boosting the dollar. A stronger dollar makes metals costlier for non-dollar buyers and can suppress demand.

"Until it is clear that the Fed has broken the back of inflation, it will remain difficult for metals as a whole to sustainably rally absent clear signs of stockout risk," said analysts at Goldman Sachs.

Visible copper inventories are low by historical standards but stocks in Chinese bonded and Shanghai Futures Exchange (ShFE) warehouses have surged to 408,680 tonnes from around 100,000 tonnes in late December. That said, ShFE stocks fell by 11,475 tonnes in the week to Friday, the first weekly fall since December, suggesting demand may be picking up.

Data this week showed Chinese factory activity increased in February at the fastest pace since 2012 and the services sector expanded rapidly. China may aim for a 6% growth rate in 2023, sources told Reuters.

However, analysts at Citi said a Chinese rebound was already priced in.

"We recommend waiting for opportunities to establish long-term copper exposure at <$8,500," they wrote, adding that aluminium was best placed to benefit from higher Chinese demand. Meanwhile, a British financial regulator said it had launched an "enforcement investigation" into the LME's handling of the nickel market last year.

LME aluminium was up 0.1% at $2,401 a tonne, zinc rose 0.2% to $3,054, nickel climbed 0.4% to $24,500 and tin gained 0.1% to $24,600. Lead was down 0.8% at $2,109.50.

Aluminium, zinc and lead were headed for weekly gains, while nickel was flat and tin fell.

(Reporting by Peter Hobson; additional reporting by Siyi Liu and Dominique Patton; editing by Jason Neely and Louise Heavens)

LME price overview COMEX copper futures All metals news All commodities news Foreign exchange rates SPEED GUIDES ))
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.