Copper bounced to its highest in about six weeks as investors hoped that easing of lockdowns and factory restarts would revive metals demand hit by the coronavirus pandemic.
Industrial metals prices rose along with stock markets, which also took heart from further stimulus measures announced by Japan.
The Bank of Japan pledged to buy unlimited amounts of government bonds, while in Europe top carmaker Volkswagen resumed work at its biggest factory in Wolfsburg, Germany.
“Chinese factories have been resuming operations and now we have some European plants also resuming operations, so if everything goes to plan and we have seen the peak of the lockdowns, we should have likewise seen the trough in metals demand,” said analyst Carsten Menke at Julius Baer in Zurich.
But the risk remains that after lockdowns are lifted economies may be slow to recover or even that a second wave of infections could emerge, he added.
“I think there’s a little more upside for the industrial metals, say between 5.0 per cent to 10 per cent, but if you balance that with the big risk which is still out there in the market, I don’t think the metals are very compelling from a risk-reward perspective.”
Benchmark three-month copper on the London Metal Exchange rose as much as 2.5 per cent to $US5,269 a tonne, its highest since March 17, before paring gains to $US5,199 by 1700 GMT, a rise of 1.2 per cent.
LME aluminium inventories keep piling up, rising to 1,336,775 tonnes, the highest since January 16 and up 38 per cent over the past six weeks, LME data showed.
LME aluminium shed 0.5 per cent to $US1,507.
The net speculative short position of LME lead has grown to 23 per cent of open interest, the highest so far this year, according to estimates by broker Marex Spectron.
China’s Yunnan province will set aside 1 billion yuan to help businesses stockpile 800,000 tonnes of base metals.
China is the world’s biggest consumer of metals and accounts for around half of global copper consumption.
Total imports of copper concentrate into China in March edged up 1.03 per cent to 1.78 million tonnes year-on-year, as the country boosted imports from alternative sources amid a slump in shipments from top suppliers Peru and Chile.
China’s nickel ore imports in March fell 42.3 per cent to a 25-month low from a year ago.
LME nickel edged down 0.1 per cent to $US12,240 a tonne after touching $US12,595, its strongest since March 13, zinc climbed 1.5 per cent to $US1,911, lead rose 1.4 per cent to 1,639.50 and tin jumped 3.9 per cent to a two-week high of $US15,475.