Copper prices rose on Wednesday on a weak dollar, which makes metals cheaper for buyers with other currencies, and on hopes that demand from top consumer China will improve.
* The metal used in energy and construction has recovered from a 20-month low but is still down 30% from its record high in March as aggressive interest rate hikes in many countries cause an economic slowdown. .
* The US Federal Reserve is expected to raise its key interest rate by 0.75% on Wednesday.
* Benchmark copper on the London Metal Exchange (LME) was up 0.8% at $7,598 a tonne by 1054 GMT, after falling as low as $6,955 on July 15.
* The rally is due to hedging of short positions by speculators, who increased their bets on further price declines and now have to buy back their positions, according to brokerage Marex.
* Demand in China is reviving after COVID-19 lockdowns restricted factory activity earlier in the year.
* The profits of industrial companies returned to growth in June and the government has promised economic stimulus and support to the real estate sector, which is going through a debt crisis.
* Stocks of copper on the Shanghai Futures Exchange (ShFE) and in Chinese bonded warehouses are low by historical standards and have recently declined.
* Yangshan copper import premiums rose to $87 a tonne, the highest since December, suggesting increased demand for the metal abroad.
* But Citi analysts forecast China’s economic recovery to stall and copper to fall to $6,600 within 6-9 months.
* “We recommend selling copper and nickel … over the next week as the European recession, a broader slowdown in global growth and strong supply growth push their physical markets into surplus,” they said.
* Among other industrial metals, aluminum fell 0.1% to $2,418 a tonne, zinc fell 0.1% to $3,035.50, nickel rose 0.6% to $21,700, lead lost 1 0.3% to $2,016.50 and tin gained 0.3% to $24,535.
* To view up-to-date base metal prices:
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– LEAD
– TIN
– NICKEL
– ALUMINUM
– ZINC