LONDON: Copper prices steadied on Wednesday near 4-1/2 month lows as traders weighed the risks of rising interest rates, COVID outbreaks in China and slowing factory activity impacting demand.
Benchmark copper on the London Metal Exchange (LME)was up 1.5% at $9,549 at 1613 GMT after falling 3.7% on Tuesday.
The metal, used in power and construction, surged from lessthan $5,000 a tonne in March 2020 to a record high of $10,845 in March this year, but is now down around 13% from that peak.
“The outlook in the short term is challenging,” said SaxoBank analyst Ole Hansen. But he said that over the longer term prices would be supported by the shift from fossil fuels to electrification, which will require large amounts of copper.
China holiday: Chinese markets have been closed for a public holiday, reducing trading activity. They reopen on Thursday.
Covid: The Chinese capital Beijing is trying to stop thespread of COVID-19 and avoid the fate of Shanghai, wheremillions have been under strict lockdown for more than a month.
Copper hits near 3-month low on growth fears
“A deteriorating COVID situation is one of the key headwindsweighing on metals,” said ING analyst Wenyu Yao. China is theworld’s biggest metals consumer.
China’s central bank pledged monetary policy support to theeconomy on Wednesday.
Factories: Data in recent days show manufacturing activity slowing or contracting in China, the United States and Europe in April.
Fed: The U.S. Federal Reserve is expected on Wednesday to raise interest rates by 0.5% - the biggest hike since 2000.
Dollar: The U.S. dollar is near a 20-year high against abasket of major global currencies, making dollar-priced metalscostlier for non-U.S. buyers.
Lead: The LME said it was suspending with immediate effectwarranting of Russian-produced lead in its warehouses following European sanctions on Russia. It said there was currently no Russian lead in its system.
Benchmark lead was up 1.5% at $2,285.50 a tonne.
Other metals: LME aluminium was up 2.7% at $2,990 atonne after falling 4.6% on Tuesday. Zinc rose 0.2% to$3,967.50, nickel fell 0.9% to $30,705 and tinwas 1.1% higher at $40,705.