Copper and aluminum prices advance on hopes of higher demand in China

The prices of copper and of the aluminum rose on Friday, with the hope that demand will pick up in China thanks to new efforts to boost its troubled real estate sector and the broader economy.

However, the gains were limited and some metals were in the red due to nervousness about the increase in cases of coronavirus in chinathe top consumer of metals, and ahead of closely watched US jobs data.

Three-month copper on the London Metal Exchange (LME) was up 0.7% at $8,436 a tonne by 1100 GMT, while aluminum was up 0.6% at $2,270.

“There is a fairly general view that commodities will rise towards the end of the year, but the context of rather weak demand at the moment complicates matters,” said Dan Smith, head of research at Amalgamated Metals Trading. “In the short term, we remain bearish because there is a lot of instability in the market that we need to overcome first.”

Copper hit its highest level in almost six months in mid-December on a weaker dollar, but hit a two-month low on Wednesday amid concerns about a possible global recession.

Economists and analysts believe authorities in China will take more steps to stimulate housing demand this year, as part of Beijing’s overall goal of boosting its $17 trillion economy after a sharp COVID-induced recession.

The most-traded February copper contract on the Shanghai Futures Exchange was up 1.8% at 65,240 yuan ($9,508.82) a tonne.

Copper was also supported by news that Chile, the world’s largest copper producer, posted a 6.9% drop in production in November to 449,000 tonnes.

Investors were awaiting US jobs data at 1330 GMT, which likely shows the US economy maintained a strong pace of job and wage growth in December.

Meanwhile, nickel in Shanghai extended its losses, falling 6.1% to 210,200 yuan, its lowest level since December 7. Traders said the drop was partly due to rising supply expectations after China’s Tsingshan Group, the world’s largest nickel producer, started its new nickel project.

LME nickel, meanwhile, fell 6.8% on Thursday but recovered slightly on Friday, gaining 0.8% to $27,955.

Among other metals, zinc on the LME was down 0.7% at $2,984 a tonne; lead fell 1.2% to $2,190.50; but tin was up 0.7% at $25,025.