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Copper prices rose in London on Monday, as a liquidity injection by China’s central bank, the People’s Bank of China, came as a sign of support to the Chinese economy and helped the metal recover from a five-month low hit last week.
Benchmark copper CMCU3 on the London Metal Exchange (LME) was up 0.7% at $8,314 a tonne by 10:00 GMT.
The metal had touched $8,136.50 on Friday, its lowest since Nov. 30, amid concerns about demand from top consumer China and selling by momentum-based funds.
“We are seeing a marginal rebound in base metal sentiment followed last week’s sustained weakness,” said Arthur Parish, metals associate at SP Angel.
“Several signs of optimism are developing from China, with today’s PBOC liquidity injection likely driving the short-term recovery in prices. Copper demand remains muted and inventory levels are high,” he added.
Along with the liquidity injection by the PBOC, there is also “some bargain hunting following last week’s weakness” in metals, Julius Baer analyst Carsten Menke said.
The U.S. dollar fell from a five-week high on Monday, making dollar-denominated metals more attractive to buyers holding other currencies.
China, whose demand has so far failed to meet the optimism after Beijing lifted COVID-19 curbs in early 2023, is due to report monthly industrial production and retail sales on Tuesday.
The country is likely to import more refined copper later this year, according to a senior analyst at trading house Trafigura said.
LME aluminium CMAL3 was up 1.7% at $2,268.5 a tonne after the on-warrant stocks in the LME-registered warehouses declined to 373,025 tonnes, their fresh three-month low.