LONDON: Copper extended its rally on Friday on optimism about a pick-up in demand in China, the metals’ main consumer, as lower mortgage rates and progress in easing COVID lockdowns boosted the feeling.
Benchmark three-month copper on the London Metal Exchange (LME) gained 0.1% to $9,422 a tonne as of 1555 GMT after hitting $9,510, its highest level since May 6.
The contract was expected to gain 3% this week, the first weekly rise since early April.
Copper fell around 15% from early March to mid-May on fears of a slowing Chinese economy affecting demand for metals and a possible recession in other major economies amid high inflation.
China cut its benchmark mortgage benchmark rate by a surprisingly wide margin on Friday, its second cut this year as Beijing seeks to revive the struggling housing sector to support the economy.
“Before, support measures for the real estate market were very targeted, but this is a more visible and widespread signal of support,” said Xiao Fu, head of commodity market strategy at Bank of China. International.
Shanghai authorities’ plans to end an extended citywide lockdown on June 1 appear to remain on track despite a few new COVID-19 cases, supporting the market.
“There is a step-by-step plan for reopening in Shanghai and other parts of the country are doing well. So the situation seems to be under control now and the market is expecting a rebound,” Fu said.
June’s most active copper contract on the Shanghai Futures Exchange ended the day up 0.8% at 71,900 yuan ($10,774.60) a tonne.
Global primary aluminum production in April was unchanged year-on-year at 5.599 million tonnes, the data showed.
The US dollar was heading for its worst week since early February against its major peers, making US dollar-denominated metals cheaper for buyers using other currencies. Global zinc and lead markets posted deficits of 6,300 tonnes and 9,600 tonnes respectively in March after surpluses in February, the data showed.