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LONDON — Copper continued its rally on Wednesday, rising to its highest levels since June as speculators bet that low inventories and rising Chinese demand will lift prices.
Benchmark copper on the London Metal Exchange was up 1.8% at $9,435 a tonne at 1147 GMT having reached $9,481.
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Prices of the metal used in electrical wiring are up 13% this month and more than 35% from a low of $6,955 last July.
Demand for copper is currently weak and set to stay that way as China heads into its Lunar New Year holidays next week. But investors believe China’s lifting of COVID-19 restrictions will enable its economy to bounce back from last year’s slump.
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Prices of other industrial metals also rose strongly.
Demand will improve, said BMO analyst Colin Hamilton. “It (copper) is running a little bit ahead of fundamentals, but there’s just no inventory,” he said.
Chinese bonded warehouses and warehouses registered with the LME and the COMEX and Shanghai Futures exchanges contain around 285,000 tonnes of copper, significantly below levels typical before the coronavirus pandemic.
“We’d normally be building inventory at this time of the year but we aren’t,” Hamilton said.
Also helping is the U.S. dollar, which has weakened 11% since September against a basket of major currencies, making dollar-priced metals cheaper for many.
Oil prices and global equities also rose, with markets in bullish mood.
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Meanwhile, Chilean miner Antofagasta said its copper output fell 10.4% in 2022 and a source said operations at the huge Antapaccay copper mine in Peru were at “restricted” capacity.
However, analysts at Citi said: “it’s not a great risk-reward from here for base metals bulls.”
“A weak (Chinese) property sector compared with historical activity level is a key concern, unless and until major fiscal and monetary stimulus were to come,” they said.
LME aluminum was up 1.1% at $2,647.50 a tonne, zinc rose 2.3% to $3,369, nickel jumped 4.4% to $27,855 and tin was up 1.3% at $28,785. Lead fell 1.8% to $2,185.50 a tonne. (Reporting by Peter Hobson, Additional reporting by Siyi Liu and Dominique Patton; Editing by Emelia Sithole-Matarise)
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