LONDON: Copper prices rose for a third day on Wednesday as China, the biggest consumer, stimulated its economy and after Pfizer said a three-shot course of its vaccine could neutralise the new Omicron coronavirus variant.
China’s yuan shot to its strongest level against the US dollar since 2018, making dollar-priced metals cheaper for Chinese buyers, after a cut in bank reserve requirements released 1.2 trillion yuan ($188 billion) in long-term liquidity.
However, US and European markets and oil prices stalled after two days of gains.
Benchmark copper on the London Metal Exchange (LME) was up 0.5% at $9,645 a tonne at 1700 GMT.
The metal used in power and construction is up more than 20% this year, but has traded between around $9,000 and $10,000 since reaching a record high of $10,747.50 in May.
Omicron triggered a sharp reduction in speculative bets on higher prices, and with the market lacking direction, investors are cautious, said Saxo Bank strategist Ole Hansen.
But he said low stockpiles, strong Chinese imports and a positive demand outlook meant the market was “skewed to the upside”.
OMICRON: BioNTech and Pfizer said three doses of their vaccine were effective against Omicron and they could deliver an upgraded coraonvirus vaccine in March 2022 if needed.
POSITIONING: Speculators slashed their net long position in copper on the Comex exchange to the lowest in more than a year.
CHINA: China’s copper imports in November rose 24.3% from the October to their highest since March.
COPPER STOCKS: Inventories in Shanghai Futures Exchange warehouses and Chinese bonded warehouses have fallen rapidly since the summer, pointing to a tight market.
However, copper stocks in LME-registered warehouses have risen from historic lows and premiums for quickly deliverable metal have tumbled, suggesting good availability.
SUPPLY: Peruvian government officials failed to broker a deal to unblock a key distribution corridor used by MMG Ltd’s Las Bambas copper mine.
PRICES: LME aluminium was unchanged at $2,628.50 a tonne, zinc was up 2.7% at $3,315, nickel gained 0.3% to $20,250, lead rose 4.3% to $2,279.50 and tin was up 1.2% at $39,400.