BY ONOME AMUGE
Copper prices gained at the close of the week’s trading activities on expectations that an injection of stimulus from top metals consumer, China, will trigger demand for the red metal amid worries over a supply crunch in the global market.
Three-month copper on the London Metal Exchange (LME) was up 0.4 percent to $10,335.50 a tonne, as the metal also leapt to a weekly gain.
The most-active May copper contract on the Shanghai Futures Exchange (ShFE) also traded 0.4 percent higher at 74,180 yuan or $11,651.25 a tonne.
China, which accounts for nearly half of global copper consumption estimated at 24 million tonnes, is currently struggling to control a recent Covid-19 outbreak which threatens to wear down economic growth and disrupt supply chain. As a result, the Chinese cabinet said it will implement timely cuts in banks’ reserve requirement ratios alongside other policy tools to support the economy of the world’s most populous country, as economic headwinds rise amid the Covid-19 outbreaks.
According to betastic.com, ANZ commodity analysts, China’s recent struggle to contain another wave of Covid-19 infections is causing logistical bottlenecks, while indications suggest minimal impact on demand, with tight supplies likely to drain inventories in the medium term.
ANZ’s copper demand indicator showed that consumption is holding up well, driven by a pick-up in the power sector, adding that it is within a better growth impulse in China, as the government looks to support economic activity.
Adding to supply worries is the report that Southern Copper Corporation’s (SCC) Peruvian mine remains closed after six weeks of a standoff with protesters, as the company accused Peru’s government of failing to intervene to guarantee security for its 1,300 workers and their families.
Meanwhile, zinc was hit by profit-taking as prices of the metal tumbled 1.4 percent to $4,400 a tonne, after recording a five-week high in the last session underpinned by supply worries as inventories shrank and smelters in Europe struggled amid a spike in energy costs.
For other metals, aluminium posted the highest gain, climbing 1.5 percent to $3,283 a tonne, tin rose 0.2 percent to $43,425 a tonne, tin was up 0.1 percent to $2,436 a tonne, while nickel saw little change at $32,970 a tonne.