Copper hit 5-month high but then fell

Copper prices hit near five-month highs on Monday on optimism about demand in top consumer China, after officials took steps to shore up the country’s property sector and ease its stringent Covid restrictions.

However, selling buoyed by a firmer dollar, higher inventories and profit taking caused copper prices to fall back later.

Benchmark copper on the London Metal Exchange fell 1.4% to $8,373 a tonne, from a previous $8,600, the highest level since June 23.

China’s loosening of Covid-19 restrictions included reducing quarantines by two days for close contacts of infected people and for incoming travelers, but a complete rollback of Covid controls may be a long way off.

A notice to financial institutions from Chinese regulators outlined steps to support the industry, including loan repayment extensions, in a push to ease the liquidity crunch that has plagued the property sector since 2020.

Easing LME copper supply concerns from rising inventories weighed on prices, while the premium for the three-month cash contract eased to near zero from $135 a tonne just three weeks ago. .

Copper was also affected by a strong dollar, which makes dollar-denominated metals more expensive for holders of other currencies.