Copper prices climbed to their highest since April 2022 on Tuesday amid inflows of funds into the base metals sector, although high prices have hurt Chinese consumers’ appetite.

Three-month copper on the London Metal Exchange (LME) rose 0.4% to $10,224 per metric ton by 0750 GMT, having touched $10,255.50 earlier in the session.

The contract has gained 19% so far this year and is just over $600 away from its record high of $10,845 hit in 2022.

Funds betting on US rate cuts, supply disruptions, and stronger demand for metals in the green energy sectors have been funneling money into base metals and broader commodities while using the sector as a hedge against inflation.

However, trading in China’s physical copper market is not that active due to high prices and demand in the second quarter - the traditionally strong consumption season - is lower than expected, said analyst He Tianyu at CRU Group.

The demand weakness comes from the wire rod sector which accounts for 65% of China’s total copper demand as state grid companies feared the costs could transfer to higher electricity prices and have knock-on effects on the economy, he said.

Copper heads towards two-year highs

Other sectors such as air conditioning and home appliances saw higher copper prices transition smoothly into end-user product prices, he added.

The most-traded June copper contract on the Shanghai Futures Exchange (SHFE) closed 2% higher at 82,280 yuan ($11,368.25) a ton.

LME aluminium edged up 0.1% at $2,547 a ton, tin climbed 1.1% to $33,265, while nickel fell 0.4% to $19,160, zinc declined 0.2% to $2,991 and lead eased 0.3% to $2,244.50.

SHFE aluminium rose 0.3% to 20,545 yuan a ton, zinc increased 1.3% to 23,720 yuan, lead advanced 1.5% to 18,370 yuan, tin jumped 4.3% to 273,030 yuan, and nickel was up 0.6% at 144,460 yuan.