Copper set for best week since October on supply crunch

Jan 14 (Reuters) – Copper prices eased on Friday as investors braced for a U.S. interest rate hike in March, but were headed for their biggest weekly gains since October supported by tight supply.

Three-month copper on the London Metal Exchange was down 0.4% at $9,920 a tonne by 0715 GMT, but it was up nearly 3% for the week, its biggest gain in 13 weeks.

The most-traded February copper contract on the Shanghai Futures Exchange ended down 0.6% at 71,460 yuan ($11,249.82) a tonne.

“Base metal prices may moderate from the current elevated levels as supply loosens up, but we expect prices to remain well above pre-pandemic levels,” CreditSights said in a report.

Tight supply fundamentals, relatively stable demand outlook and exposure to growth trends amid the green transition for metals like copper and nickel were expected to support prices, according to the report.

On-warrant LME copper inventories were at 78,000 tonnes, down about 67% from August highs, while stocks in warehouses monitored by the Shanghai Futures Exchange were near their lowest since 2009.

U.S. Federal Reserve Governor Lael Brainard became the latest official to signal the central bank will start raising interest rates in March to battle inflation. read more

An early rate hike could trim liquidity in financial markets and slow down recovery in the world’s biggest economy.

FUNDAMENTALS

* LME aluminium inched 0.1% higher to $2,954 a tonne, lead was flat at $2,358.5 and zinc eased 0.1% to $3560. Nickel rose 1.2% to $22,440 a tonne and was up 8.3% for the week, its biggest weekly gain since August 2019.

* ShFE aluminium fell 2% to 21,160 yuan a tonne, zinc rose 0.4% to 24,975 yuan, lead rose 2% to 15,655 yuan and tin dipped 0.5% to 309,340 yuan. Nickel scaled a fresh record peak of 167,300 yuan a tonne in the session and was last up 2.5% at 167,260 yuan.

* China’s imports of unwrought copper and copper products slipped in 2021 from the previous year’s record, though imports of copper concentrate hit a historic high. read more

* China’s economic growth is likely to slow to 5.2% in 2022, before steadying in 2023, a Reuters poll showed, as the central bank steadily ramps up policy easing to ward off a sharper downturn. read more

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($1 = 6.3521 Chinese yuan)

Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich and Shounak Dasgupta

Our Standards: The Thomson Reuters Trust Principles.