By Pratima Desai
LONDON, December 28 (Reuters) – Copper prices hit two-week highs on Wednesday as China’s easing of COVID restrictions boosted buying, but recession risks and expectations of weaker demand capped gains.
Reference copper CMCU3 on the London Metal Exchange (LME) rose 1.3% to $8,457 a tonne at 11:17 GMT after hitting $8,520, the highest since Dec. 14.
China will stop requiring incoming travelers to enter quarantine from January 8, a major step towards easing restrictions at its borders which have been largely closed since 2020.
“The easing of zero-Covid-19 restrictions in China has lifted market sentiment much more than it will increase demand and the real estate market is unlikely to see a quick recovery,” said Carsten Menke, analyst at Julius Baer.
“Elsewhere, growth is unlikely to be strong enough to offset weakness in China, suggesting that 2023 will be another cyclically challenging year for copper and industrial metals more broadly.”
spikes in COVID cases in China and the Lunar New Year holiday next month should dampen demand for metals, although supply issues could provide some support.
The emphasis is on a tax dispute between the Panamanian government and First Quantum Minerals FM.TO which halted operations at its Cober Panama mine, which produced 331,000 tonnes of copper last year.
Elsewhere, lead prices CMPB3 rose to $2,302.50 a ton, the highest since May 5 on supply concerns and dwindling inventories of battery materials in LME approved warehouses, which at 25,000 tons are close to 15 year trough.
BSAs canceled – metal intended for delivery – at 39% of the total MPBSTX-TOTAL and large portfolios of warrants and cash contracts 0#LME-WHL suggest that more lead needs to be delivered.
The lead rush also created a steep premium for the money on the three-month lead contract. The premium hit a one-year high of $49 a tonne on Friday.
Three-month lead was down 0.4% at $2,264 a tonne and zinc CMZN3 gained 2.8% to $3,048 also due to low stocks in LME warehouses MZNSTX-TOTAL.
Aluminum CMAL3 slipped 0.3% to $2,383, tin CMSN3 gained 4.6% to $25,040 and the nickel CMNI3 rose 4.2% to $30,800.
(Reporting by Pratima Desai; editing by Barbara Lewis)
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