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Copper steadies, but recession fears dominate mood

Copper firms after China relaxes quarantine rules
Copper firms after China relaxes quarantine rules Copyright Thomson Reuters 2022
Copyright Thomson Reuters 2022
By Reuters
Published on Updated
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By Pratima Desai

LONDON - Copper prices steadied on Monday as sentiment improved after top consumer China eased COVID restrictions, but fears of a global recession, rising prices and higher interest rates dominated the mood in industrial metals markets.

Benchmark copper on the London Metal Exchange was little changed at $8,377 a tonne as of 1053 GMT. Prices of the metal, used as a gauge of economic health by investors, touched $8,122.50 a tonne on Friday, the lowest since February 2021.

"Copper is supported by optimism around the lifting of COVID-19 restrictions in China," said Giles Coghlan, analyst at broker HYCM. "But it's hard to see whether it will last as it all depends on whether a global recession can be avoided."

COVID: Beijing said it would allow schools to resume in-person classes and Shanghai's top party boss declared victory over COVID-19 after the city reported zero new local cases for the first time in two months.

GROWTH: Soaring inflation, interest rate hikes, expectations of further rate increases and the damage to growth and demand have seen prices of equities and commodities plummet in recent weeks.

ZINC: A small rise in stocks in LME registered warehouses, up 3,175 tonne since last Monday to 81,725 tonne, is weighing on prices of the metal used to galvanise steel.

Three-month zinc was down 0.9% at $3,318 a tonne.

Easing concern about supplies on the LME market saw the premium for cash over the three-month zinc contract fall back to $135 a tonne on Friday from above $200 a tonne the day before.

But zinc availability on the LME market will remain a problem as cancelled warrants — metal earmarked for delivery — at 78% of the total indicate more metal is due to leave LME warehouses over the coming weeks.

DOLLAR: Industrial metals overall were supported by a weaker greenback, which makes dollar-priced commodities cheaper for holders of other currencies. [FRX/]

OTHER METALS: Aluminium was up 0.2% at $2,461 a tonne, lead gained 3% to $1,973, tin rose 7.3% to $26,395 and nickel climbed 4.4% to $23,390.

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