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Copper prices touched their highest in nearly two months on Friday and aluminium also climbed on worries over an energy crisis hitting output while supply is tight and inventories low.
Three-month copper on the London Metal Exchange (LME) gained 1.9% to $8,279.50 a tonne in official open outcry trading, its highest since June 30.
Copper prices have rebounded 17% since touching 20-month lows on July 15 but are still down 25% from a record peak scaled in March.
Soaring power prices have hit energy-intensive aluminium and zinc the most, causing smelter cutbacks, but have boosted costs for metals producers across the board.
The most-traded September copper contract on the Shanghai Futures Exchange ended daytime trading 1.7% up at 63,690 yuan ($9,278.85) after touching its highest since June 30.
“As long as supply is being destroyed by the energy crisis at a faster rate than demand is being destroyed by hawkish policies of central banks, that could really tighten the fundamentals for base metals,” said WisdomTree commodity strategist Nitesh Shah.
LME benchmark aluminium gained 2.1% in official activity to a two-week high of $2,484.50 a tonne.
Weak inventories are also supporting prices, with copper on-warrant stocks – those not earmarked for delivery – hitting their lowest in more than four months this week after sliding 42% this month, LME data shows.
“If you look at inventories of base metals, they are massively below the five-year average. This is screaming very, very tight supply,” Shah said.
One of China’s biggest copper traders, Xi’an Maike Metal International Group Co, is seeking help from the government and financial institutions to alleviate liquidity issues.
LME zinc added 1.4% to $3,596 and lead rose 1% to $1,996, but nickel shed 0.6% to $21,540 and tin was down 0.5% at $24,200.