Copper prices edge higher as Russia-Ukraine tensions ease

Copper prices firmed on Wednesday as easing fears of a Russian invasion of Ukraine boosted risk appetite, with investors closely watching the release of the Federal Reserve’s January policy meeting minutes for clues on the roadmap for rate hikes.

Three-month copper on the London Metal Exchange (LME) was up 0.2% at $9,986 a tonne, as of 0720 GMT, while the most-traded March copper contract on the Shanghai Futures Exchange closed up 0.9% at 71,510 yuan ($11,289.86) a tonne.

“Two key factors that are shaping the markets presently are the Russia-Ukraine issue and impending rate hikes by central banks,” said Kunal Sawhney, chief executive at research firm Kalkine.

“Rate hike may add downward pressure on metals in the short-run, but if global economic growth is healthy, demand may not let prices remain subdued for long,” he added.

Asian shares rallied on Wednesday as the Ukraine crisis eased after Moscow indicated it was returning some troops to base from exercises.

The Federal Reserve’s January policy meeting minutes are scheduled to be released later in the day. Financial markets have priced in a better-than-even chance that the Fed will raise interest rates next month by half a percentage point.

Data showed on Tuesday that U.S. producer prices increased by the most in eight months in January in another sign of high inflation.

FUNDAMENTALS

* LME aluminum was flat at $3,207 a tonne, nickel rose 0.7% to $23,450, lead dipped 0.4% to $2,300, zinc edged 0.3% higher to $3,591.5 and tin was up 0.2% at $43,505.

* ShFE aluminum rose 0.2% to 22,615 yuan a tonne, nickel gained 1% to 173,420 yuan, zinc fell 0.3% to 25,035 yuan, lead eased 0.1% to 15,310 yuan and tin climbed 1.6% to 333,500 yuan.

* Fitch Solutions said in a note it expects tin market’s fundamentals to ease slightly over 2022-2023, driven by supply increases, but sees prices continue to edge higher over the years as robust demand is expected to outstrip supply.

* Fitch Solutions revised up its average tin price forecast for 2022 to $42,000 per tonne from $32,500.

* Baise city in the aluminum producing region of Guangxi in China on Tuesday lifted lockdowns imposed last week to fight rising local infections of COVID-19, according to a government notice.

* Copper inventories in LME-approved warehouses have fallen to 70,125 tonnes, the lowest since November 2005.

* China’s factory-gate inflation cooled to its slowest pace in six months in January, official data showed on Wednesday, as government measures to control surging raw material costs weighed on producer prices.

* Chinese nickel producer and trader Lygend Resources & Technology Co Ltd has applied to make an initial public share offering on the Hong Kong Exchange.

* For the top stories in metals and other news, click or ($1 = 6.3340 Chinese yuan renminbi) (Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Sriraj Kalluvila)