LME Commentary

 

Benchmark three-month copper on the LME was up 0.1% at $9,235 a tonne by 1600 GMT.

 

When the global epidemic broke out in March 2020, copper prices fell below $5,000 per ton, and then soared, as the global economic recovery and green transition drove demand growth and global supply was insufficient. The Russian-Ukrainian conflict in late February and Western sanctions further stoked supply concerns, pushing copper to an all-time high of $10,845 a tonne in early March. However, due to the active interest rate hike by the Federal Reserve, there are concerns that economic growth will slow down or even fall into a stagflation or recession, causing copper prices to fluctuate and fall back. Copper prices are now about 14.8% below their all-time peaks, although well above where they were for most of the past decade.

 

Analysts pointed to improving data in China, the top metals consumer, as the main driver behind the metal's rebound, and the worst is over. Although there will be some fluctuations in the future, the general trend is towards recovery. The question now is how far copper's rally can go. There appears to be an upper limit to the upside for now, as central banks around the world raise interest rates and fears of slowing global growth.

 

China's economy showed signs of recovery in May after a decline in the previous month, as industrial production rose more than expected. Auto sales for the week of June 6 jumped 54% from the same period in May. Analysts say the growth in Chinese industrial production shows that China has become very nimble in keeping its export engine spinning.

 

A weaker U.S. dollar index also supported the metal, making U.S. dollar-denominated commodities cheaper for buyers in other currencies.

 

LME aluminium rose 1.7% to $2,614.50 a tonne on Wednesday after sliding 2.2% on Tuesday and hitting its lowest level since Nov. 10. LME aluminium has fallen 37% since hitting an all-time high of $4,073.50 on March 7.

 

Aluminium output hit a record high in May as curbs on electricity consumption eased and coronavirus restrictions had little impact on output, data from the Chinese Bureau of Statistics showed.

 

In LME-registered warehouses, aluminium inventories fell to a 21-year low of 4,161.25 million tonnes, from nearly 2 million tonnes in March 2021. Inventories in Shanghai Futures Exchange warehouses stood at 269,583 tonnes, down more than 20% since mid-March.

 

In other metals, on the LME, zinc rose 1.4% to $3,647 a tonne, lead gained 0.8% to $2,091 a tonne, nickel climbed 2.2% to $25,815 a tonne and tin jumped 4% to $2,091 a tonne $32,330. (over)