Copper scales over 2-week peak on weak dollar, China demand hopes

05/23/2022 | 12:36am

May 23 (Reuters) - Copper prices rose to a more than two-week high on Monday, helped by a weaker U.S. dollar and as support measures and plans to end COVID-19 lockdowns in top metals consumer China lifted hopes for a recovery in demand.

Benchmark three-month copper on the London Metal Exchange (LME) was up 0.5% at $9,471 a tonne, as of 0418 GMT, after hitting its highest since May 5 at $9,532 in early Asian trade.

The most-active June copper contract on the Shanghai Futures Exchange rose 0.3% to 71,950 yuan ($10,758.06) a tonne by noon break, after touching its highest since May 6.

"Larger than expected China rate-cut is targeted at stimulating the property sector, which will provide a short-term bounce," said Stephen Innes, managing partner at SPI Asset Management.

"Last week, everyone turned worried about stagflation and commodities are not immune to that cyclical slowdown. So, we could be seeing short covering or some re-entering on China demand."

Shanghai, in its seventh week of lockdown, has been slowly allowing more people to leave their homes in recent days and plans to lift its city-wide lockdown and return to more normal life from June 1.

China cut its benchmark reference rate for mortgages by an unexpectedly wide margin on Friday, as Beijing seeks to revive the ailing housing sector to prop up the economy.

DOLLAR: The dollar fell to 0.2% to a near two-week low hit last week, making greenback-denominated metals less expensive for buyers using other currencies..

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COPPER: Operations have been suspended at Khoemacau Zone 5 copper and silver mine in Botswana after an underground accident killed two people on Friday, the company said on Saturday.

Inventories: Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 1.7% from a week ago, the exchange said on Friday.

OTHER METALS: LME aluminium gained 1.2% to $2,980 a tonne, zinc rose 0.5% to $3,726, lead climbed 0.3% to $2,166, while tin fell 0.9% to $34,365.

Shanghai aluminium added 0.5%, zinc eased 0.7%, nickel slipped 1.5%, lead gained 1%, while tin fell 1.3%. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Uttaresh.V)

© Reuters 2022
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