METALS-China demand optimism propels copper to 5-month high

By Reuters / November 14, 2022 / www.kitco.com / Article Link

(Updates prices, adds comment) By Pratima Desai LONDON, Nov 14 (Reuters) - Copper prices hit nearfive-month highs on Monday on optimism about demand in topconsumer China after officials moved to shore up the country'sproperty sector and ease its strict COVID restrictions. However, selling spurred by a firmer dollar, higherinventories and profit-taking saw copper prices later retreat. Benchmark copper on the London Metal Exchange wasdown 1.4% at $8,373 a tonne at 1702 GMT from an earlier $8,600 atonne, the highest since June 23. China's easing of COVID-19 restrictions included shorteningquarantines by two days for close contacts of infected peopleand for inbound travellers but a full dismantling of COVIDcontrols may be a long way off. "Relaxed protocols for COVID prevention helped start therally last week," said Giles Coghlan, analyst at broker HYCM. "The announcement of the 16 point property support plan isfurther good news supporting a return to demand for copper andunderpinning prices." A notice to financial institutions from Chinese regulatorsoutlined steps to support the industry, including loan repaymentextensions, in a major push to ease the deep liquidity crunchwhich has plagued the property sector since mid-2020. Meanwhile, receding worries about copper supply on the LMEmarket due to rising stocks weighed on prices, while the premiumfor the cash over the three-month contract hasretreated to near zero from $135 a tonne only three weeks ago. Latest data shows copper stocks in LMEregistered warehouses rose 8,925 tonnes to 86,800 tonnes.Cancelled warrants - metal earmarked for delivery - at 28% aredown 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 expensivefor holders of other currencies. In other metals, aluminium was down 1.4% at $2,430 atonne after the LME's decision not to ban Russian metal frombeing traded and stored in its system.

"How much further pressure we will see on metals pricesgoing forward will depend on whether we see a significant inflowof Russian metals into LME warehouses in the weeks and monthsahead." 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 highestsince May as funds and traders reversed bets on lower prices inan illiquid market ahead of contract settlement on Wednesday. (Reporting by Pratima Desai; editing by EmeliaSithole-Matarise, Kirsten Donovan and Sandra Maler)

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