The contract is set for its biggest monthly loss since June, having fallen by 4.4% this month, pressured by the sluggish pace of metals demand recovery in China despite shedding strict COVID-19 restrictions. Fears of a recession in Western countries and a continuing banking sector stresses have also weighed on the market.
Prices came off their lows on Friday after a top decision-making body of China's ruling Communist Party said it will maintain support for the economy, focusing on domestic demand. "The pace of demand recovery in China is not as robust as people anticipated and it's probably going to take some time," said Amelia Xiao Fu, head of commodity market strategy at Bank of China International. "The recovery of physical demand in China will be a function of how strong the rebound will be in the property market, which hasn't substantially recovered yet. Also, some of the operating rates at fabricators have been quite low."
China's factory activity is likely to have expanded at a slower pace in April, a Reuters poll showed ahead of data due on Sunday. Also supporting prices was data showing reduced copper inventories in warehouses monitored by the Shanghai Futures Exchange (SHFE), with stocks down 6.1% at 137,095 tonnes, representing a 42% decline from February's peak. In other metals, LME aluminium advanced 1.8% to $2,360.50 a tonne, zinc climbed 1.1% to $2,650, lead gained 2.4% to $2,150.50, tin rose 1.7% to $26,320 and nickel added 0.5% to $24,210. SHFE will be closed over May 1-3 while the LME will be closed on May 1 for national holidays.
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