METALS-Copper extends gains on Powell comments, China demand hopes
(Updates with official prices)
LONDON, Dec 1 (Reuters) - Copper prices on Thursday held
on to gains from the previous session as investors bet that
slower U.S. interest rate hikes and an easing of China's
COVID-19 controls would improve the outlook for demand.
Benchmark copper on the London Metal Exchange (LME)
was up 0.1% at $8,250 a tonne in official open-outcry trading
after leaping 2.5% on Wednesday, when U.S. Federal Reserve Chair
Jerome Powell said rate increases could slow "as soon as
December".
Higher rates stifle economic activity. Stock markets and
other risk assets rose and the dollar fell to a five-month low,
making dollar-priced metals cheaper for buyers with other
currencies.
China, the world's biggest metals consumer, is set to
announce in the coming days a reduction in mass COVID testing
and an easing of quarantine protocols, sources told Reuters.
Moves away from its zero-COVID policy come on top of
measures by China to support the embattled real estate sector.
Used in construction and power, copper prices fell from a
record high of $10,845 in March to as low as $6,955 in July,
before rising somewhat as markets began to anticipate economic
recovery.
However, data showed that factory output fell in many parts
of the world in November.
Copper's fundamentals remain poor and prices should move
towards $7,500 a tonne, said Julius Baer analyst Carsten Menke.
"I don't think any of the policies coming out of China will
have a big impact on property or metals demand," he said, adding
that slowing urbanisation, deteriorating demographics and weaker
growth meant China would not drive metals demand as much as in
the previous years.
Others were more bullish.
Analysts at Bank of America said that given low stockpiles
of metal, a weaker U.S. dollar, a Chinese economic rebound and
accelerating use of copper in green technology could push prices
to $12,000 next year.
LME aluminium was down 0.7% at $2,459.50 a tonne,
zinc rose 0.4% to $3,050, nickel fell 0.3% to
$26,900, lead slipped 1.1% to $2,169 and tin was
up 0.8% at $23,100.
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