LONDON: Copper prices rose on Monday as fears about further damage to growth and demand from the Omicron coronavirus variant eased on reports that the symptoms have been mild so far, shifting market attention back to low inventories.
Benchmark copper on the London Metal Exchange (LME) was up 1.5% at $9,600 a tonne by 1115 GMT, having lost 3.5% on Friday.
"The bullish argument rests on historically low warehouse inventories," said Neil Welsh, a broker at Britannia Global Markets. "On the bearish side, we have inflation fears, dollar strength and COVID concerns."
Industrial metals slide on new COVID-19 variant jitters
Omicron: The new coronavirus variant is likely to spread internationally, bringing "severe consequences" in some areas, the World Health Organization (WHO) advised its 194 member nations.
Inventories: Copper stocks in LME-registered warehouse, at 80,075 tonnes, are about a third of level registered in late August.
Cancelled warrants - metal earmarked for delivery - at 19% suggest that another 15,350 tonnes is heading out.
Worries about copper supplies on the LME market and a scramble for metal has often created a large premium for cash copper over the three-month contract.
Dollar: A stronger US currency makes dollar-denominated metals more expensive for holders of other currencies, which is likely to subdue demand.
China: Clues to demand prospects in top consumer China will come from surveys of purchasing managers over the next few days.
A Reuters survey showed China's factory activity is likely to have shrunk at a slower pace in November. Supply snags and power cuts have eased but persistent softness in manufacturing points to a further slowing of the economy.
Zinc: Falling zinc stocks on the LME, down 20% to 161,450 tonnes since April, cancelled warrants at 22% and large warrant holdings have also fuelled a jump in the premium for cash zinc over the three-month contract.
The premium was last at $128 a tonne while three-month zinc rose 0.1% to $3,197.
Other Metals: Aluminium was up 1.4% at $2,650, lead gained 2.2% to $2,318, tin advanced 1.6% to $39,280 and nickel was up 1.4% at $20,185.
Comments
Comments are closed.