Copper is poised for its first weekly gain in 7 weeks – Markets

LONDON: Copper prices were on track for their first weekly rise in seven weeks on Friday as investors returned to riskier assets after a sharp selloff.

Benchmark copper on the London Metal Exchange (LME) was up 1.5% at $7,430.50 a tonne at 4:14 p.m. GMT, nearly 3.5% higher this week.

But prices for the metal used in power and construction remain down more than 30% from a high in March after hitting $6,955 last week, the lowest since November 2020.

Industrial metals and global equities have fallen in recent months as inflation rose and central banks began rapid interest rate hikes that could tip the world into recession.

But this week, investors have lowered their expectations for rate hikes in the United States. Global equities are up for a sixth day and the dollar has weakened from 20-year highs, helping dollar-priced metals by making them cheaper for buyers with other currencies.

“Markets are on edge with such hawkish central banks, but the pressure from rising rates should ease at some point,” said WisdomTree analyst Nitesh Shah.

Authorities in China, the biggest consumer of metals, again said they would stimulate the economy after COVID-19 restrictions caused a sharp slowdown.

Chinese demand should improve, Shah said, predicting price volatility.

“We need to break (above) $7,500 to go bullish,” said a trader in London.

The short-term economic outlook remains bleak. Investors expect a 75 basis point hike in US rates next week after a 50 basis point hike by the European Central Bank on Thursday.

The Eurozone manufacturing slowdown is accelerating and factory growth is slowing in the United States, Japan and Australia.

Miner Freeport-McMoRan said copper prices are not high enough to support new mines, which could worsen already tight supply.

But as shortfalls loom later in the decade, many analysts expect copper supply to rise sharply through 2023.

LME aluminum rose 1.9% to $2,466 a tonne, zinc rose 1.9% to $2,993, nickel gained 3.4% to $22,200 a tonne, lead was remained flat at $2,012.50 and tin rose 0.3% to $24,910 a tonne.

All were heading for weekly gains.