Industrial metal prices rose on Monday as major Chinese consumer plans to ease COVID restrictions raised expectations of a recovery in demand, but damage to growth from lockdowns limited gains.
Benchmark copper on the London Metal Exchange was up 1% at $9,254 a tonne as of 4:02 p.m. GMT, while aluminum was up 1.4% at $2,828 a tonne after hitting a one-week high at $2,865 a tonne.
“China’s zero-COVID lockdown policy, energy-driven inflation, rising US real rates and a stronger dollar are driving demand headwinds,” said David Wilson, analyst at BNP Paribas.
Wilson expects “sustained market tightening outside of China, higher European smelter costs and reduced aluminum exports from China in the second half of 2022” to support aluminum.
CHINA: Shanghai on Monday outlined plans for returning to more normal life from June 1 and ending a COVID lockdown that has lasted more than six weeks.
China’s economic activity cooled sharply in April as shutdowns weighed heavily on industrial production and employment, adding to fears that the economy could contract in the second quarter.
UNITED STATES: Rising interest rates and expectations of further rises have boosted the US dollar, which, when it appreciates, makes dollar commodities more expensive for holders of other currencies.
ENERGY: Record electricity prices in Europe have pushed up the costs of producing metals such as aluminum and zinc in Europe.
ALUMINUM: Stocks in warehouses approved by the LME at 532,500 tonnes, historically low levels for almost 17 years, and stocks under record mandate – metal available on the market – at 260,075 tonnes reflect the tightness of the aluminum outside of China.
LME availability concerns reduced the silver discount on the three-month aluminum contract to $25 a tonne from $36 a week ago.
COPPER: Copper inventories in LME warehouses have risen, but warrants canceled at 42% suggest significant amounts of the metal will be delivered over the next few days.
The premium for silver on the three-month copper contract was last at $25.60 a tonne, the highest since early March.
OTHER METALS: Zinc rose 3.2% to $3,601 a tonne, lead gained 1.6% to $2,093, tin added 1.4% to $33,830 and nickel slipped 2.5% to $26,575.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)