LONDON- Copper prices inched higher but were set to end the week slightly lower as traders balanced hopes for solid demand in China with pessimism about the global economy.
Inflation data in Germany and Japan released on Friday and statements from European and US central bankers this week suggest that rapid, economically damaging interest rate rises will continue.
Investors turned cautious, pushing down global equities and driving up the US dollar – pressuring dollar-priced metals by making them costlier for buyers with other currencies.
However, China, the biggest metals consumer, is widely expected to lower its benchmark lending rates on Monday and has pledged other stimulus to support its economy.
China’s Yangshan copper import premiums surged to $107 a ton from less than $10 in March, suggesting greater appetite for overseas metal.
Copper stocks in Shanghai Futures Exchange (ShFE) warehouses fell to 31,205 tons on Friday from 41,811 tons a week earlier.
Traders were also wary that COVID-19 lockdowns and energy rationing in some parts of China could impact metals production. Rationing has shut some zinc smelters, said consultants CRU.
But Chinese demand is unlikely to rebound strongly because its property market is in crisis, infrastructure construction is not rapid enough and export demand is weak, said Julius Baer analyst Carsten Menke.