Copper prices rise sharply as market attention focuses on inventory shortages

Copper prices rose on Monday as fears about further damage to growth and demand for omicron were alleviated by reports that, so far, the new variant of the coronavirus generates mild symptoms, returning the market’s attention to the shortage in metal stocks.

At 1115 GMT, three-month copper on the London Metal Exchange (LME) was up 1.5% at $ 9,600 a tonne after falling 3.5% on Friday.

“The bullish argument is based on historically low warehouse inventories ”, said Neil Welsh of Britannia Global Markets. “On the bearish side, we have inflation fears, dollar strength and COVID concerns.”.

The new variant of the coronavirus is likely to spread internationally, bringing “serious consequences” to some areas, the World Health Organization (WHO) warned its 194 member countries.

Copper stocks in deposits registered with the LME total 80,075 tonnes, or about a third of the level registered at the end of August.

The rise in copper was contained by a higher dollar, which made raw materials more expensive for holders of other currencies.

Clues about the demand outlook in China will be seen in Purchasing Manager Surveys (PMI) in the coming days.

A Reuters poll showed that China’s manufacturing activity was likely to have declined at a slower pace in November. Supply problems and power outages have subsided, but persistent weakness in manufacturing points to a further slowdown in the economy.