BY ONOME AMUGE
Copper extended its recovery towards a bullish range, underpinned by optimism about demand resurgence in China, the world’s largest consumer following a mortgage rate cut and gradual easing of Covid lockdowns in the East Asian country.
Benchmark three-month copper on the London Metal Exchange (LME) was up 0.8 percent to $9,490 a tonne, its highest value since the first week of May. The contract was also up 3.3 percent for the week. The most-active June copper contract on the Shanghai Futures Exchange (ShFE) gained 0.8 percent to 71,900 yuan ($10,774.60) a tonne.
Prior to this period, the red metal used in power and construction sectors and widely seen as a barometer of global economic growth, had stumbled by about 15 percent from early March to mid-May on worries about a downturn in China’s economy hitting metals demand and a possible recession in other major economies amid high inflation.
However, plans by Shanghai authorities to end a prolonged city-wide lockdown in the first week of June has triggered a positive sentiment for the copper market, with expectations of a strong demand after the lockdown.
Xiao Fu, head of commodity market strategy at Bank of China International, noted that there is a “step by step” plan for reopening in Shanghai, while the other parts of the country are recording good recovery from the pandemic.
“The situation seems to be under control now and the market is expecting a rebound,” Fu added.
Also lending support to copper’s rise is the report that China cut its benchmark reference rate for mortgages by an unexpectedly wide margin, its second reduction in 2022 as Beijing seeks to revive the ailing housing sector to prop up the economy.
Other base metals also moved in a bullish direction as aluminium settled 1.7 percent higher to $2,957 a tonne, zinc was up 0.8 percent to $3,743.50, lead rose 3.7 percent to $2,140 a tonne, tin climbed 1.8 percent to $34,850. On the other hand, nickel slipped 1.4 percent to $27,845 a tonne.
