Base metals rallied on Wednesday as supply concerns overshadowed worries about weakening demand, with prices climbing across the board. The rise in base metals was also supported by a decline in the U.S. dollar from a five-month high.
Three-month copper on the London Metal Exchange rose by 0.5% to $9,514.50 per metric ton, while the most-traded June copper contract on the Shanghai Futures Exchange fell by 0.2% to 76,920 yuan per ton.
Industrial metals initially faced losses following disappointing economic data from China, but analysts at Huatai Futures remained optimistic about copper prices due to ongoing supply disruptions caused by mine closures.
The ban on Russian metal by the LME, in compliance with new sanctions imposed for Russia’s invasion of Ukraine, also contributed to the market support. Meanwhile, a weaker dollar made it cheaper to purchase greenback-priced commodities, further aiding the rally in base metals.
LME aluminum added 0.3% to $2,569.50 per ton, zinc rose by 0.7% to $2,790.50, lead gained 0.3% to $2,155, tin remained steady at $31,820, and nickel jumped by 1% to $17,910.
In Shanghai, aluminum declined by 0.3% to 20,360 yuan per ton, nickel dipped by 0.1% to 136,100 yuan, and tin was down by 0.7% to 254,680 yuan. However, lead added 0.4% to 16,885 yuan and zinc climbed by 0.5% to 22,585 yuan.
Overall, base metals are expected to remain buoyant amid supply disruption concerns and a softer dollar, providing support for the market.
