Copper steadies, but recession fears dominate mood

© Reuters. FILE PHOTO: A worker monitors a process at the Codelco Ventanas copper smelter in Ventanas, Chile, January 7, 2015. REUTERS/Rodrigo Garrido

By Pratima Desai

LONDON (Reuters) – 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.