LONDON: Copper prices bounced on Tuesday after China’s central bank said it would boost policy support for the economy, but COVID-19 lockdowns in the top consumer and expectations of aggressive U.S. interest rate hikes capped gains.

Benchmark copper on the London Metal Exchange traded up 1.5% at $9,918 a tonne in official rings. Prices of the metal used widely in the power and construction industries fell to $9,756.50 on Monday, the lowest since Feb. 9.

“Hopes for further Chinese stimulus have helped sentiment, but the negatives are still there,” a metals trader said.

“The Fed meeting is on the horizon and lockdowns in China have already impacted economic activity and demand and created logistical problems that are slowing things down even more.”

Fed: Expectations are for a half-percentage point U.S. rate rise at the Fed’s next meeting on May 3-4 and traders are betting the central bank will go even further over the coming months.

China: China’s central bank said it would step up prudent monetary policy support to the real economy, particularly for small firms hit by COVID.

Surveys of purchasing managers in China’s manufacturing sector later this week are expected to show activity contracted in April due to the lockdowns.

Stocks: A decline in copper stocks in LME registered warehouses and large holdings of warrants and cash contracts are fuelling worries about availability of the metal on the LME system.

This has created a premium for cash over the three-month contract this week. It closed at nearly $15 a tonne on Monday compared with a discount of $13 last Thursday.

Technicals: Copper is holding below the 100-day moving average currently at around $9,925. Strong support comes in at the 200-day moving average around $9,700-$9,7010.

Other Metals: Aluminium was up 0.9% at $3,117 a tonne, zinc rose 1.7% to $4,240, lead gained 1.2% to $2,354, tin climbed 2.7% to $40,950 and nickel was little changed at $32,625.