Copper inched higher on Monday as worries about banking sector turmoil eased, but prices remained under pressure as investors braced for a credit squeeze that would restrict economic growth and metals demand.
Benchmark copper on the London Metal Exchange (LME) rose 0.4% to $8,952.50 a tonne at 1605 GMT, with U.S. stock markets also firming.
Prices of the metal used in electrical wiring have drifted from a seven-month high of $9,550.50 in January but remain well above last year's low of $6,955, with many analysts expecting a rally above $10,000 this year.
Demand for copper in China, the biggest consumer, is increasing, but bank collapses have raised the threat of stalled lending, despite the sale of failed Silicon Valley Bank (SVB) to a regional U.S. peer and reports of a possible expansion of funding lifelines. "Our base-case forecast for base metals this year embeds a tension between a mild U.S. recession developing later this year and a stronger 2023 economic growth environment in China," JPMorgan analysts said.
"Hence, while we see base metals prices grinding lower in the coming quarter, we are not calling for an outsized rebasing lower and still forecast a more sustained recovery developing in 2024." Citi analysts said that Chinese investment in infrastructure and manufacturing was strong but investment in property, a key source of metals demand, was weak. "We continue to recommend waiting for opportunities to establish long-term copper exposure at less than $8,500 a tonne," they wrote. Speculators in copper futures on the COMEX exchange remain bearish. In other metals, LME aluminium advanced 1.2% to $2,364 a tonne, zinc rose 0.8% to $2,914.50 and lead climbed 0.3% to $2,132.50.
Nickel rose 1.1% to $23,715 as LME trading during Asian hours resumed after a year's hiatus. Tin jumped 2.5% to $25,455 a tonne as the cash contract flipped to a premium against three-month metal, a sign of tight supply. (Reporting by Peter Hobson Additional reporting by Siyi Liu and Dominique Patton Editing by David Goodman and Richard Chang)
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