LME copper hits more than 6-month peak as China reopens border

9th January 2023

By: Reuters


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London copper jumped to a more than six-month high on Monday, while most other base metals also rose as demand prospects brightened after top consumer China reopened its borders.

Three-month copper on the London Metal Exchange was up 1.3% at $8 698.50 a tonne, as of 08:05 GMT, after hitting its highest since June 23, 2022 at $8 711 earlier in the session.

The most-traded March copper contract on the Shanghai Futures Exchange SCFcv1 closed up 1.5% at 66 090 yuan ($9 750.52) a tonne. The contract leapt 1.8% earlier in the session to its highest since December 30 at 66 260 yuan a tonne.

After three years, mainland China opened sea and land crossings with Hong Kong and ended a requirement for incoming travellers to quarantine, dismantling a final pillar of a zero-Covid policy.

"The events of last weekend have seemingly changed many people's views on the global economy... This in turn has led to talk of green shoots of recovery, full steam ahead for the Chinese, and thus the global economy," Malcolm Freeman, a director at broker Kingdom Futures, said in a note.

The US dollar eased on China's reopening of its borders and rising hopes that the US Federal Reserve would slow the pace of its interest rate hikes following the December jobs report.

A weaker dollar makes greenback-priced metals cheaper to holders of other currencies.

Economists and analysts also believe policymakers in China will take more steps to stimulate home demand this year after a Covid-induced downturn. 

Metals are used extensively in housing construction.

LME zinc CMZN3 increased 2.4% to $3 095.50/t, nickel CMNI3 rose 1.6% to $28 530/t, lead CMPB3 rose 2.9% to $2 265/t, aluminium CMAL3 advanced 1.9% to $2 339.50/t and tin CMSN3 was up 2.2% at $25 820/t.

SHFE aluminium SAFcv1 advanced 0.5% to 17 980 yuan a tonne, zinc SZNcv1 increased 1.2% to 23,575 yuan a tonne, nickel SNIcv1 fell 0.3% to 212,110 yuan a tonne and lead SPBcv1 fell 0.5% to 15,595 yuan a tonne.

However, Freeman was cautious of the bullishness in metals prices, as the state of Chinese, US and European economies is not improving fast.

Edited by Reuters


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