Industrial metals: The LMEX rose to its highest level since June 2022

The LMEX rose to its highest level since June 2022. Copper increased by more than 3% and reached its highest level in 6½ months at USD 8,870 per tonne. Aluminium even rose by more than 6% to USD 2,445 per tonne, zinc by 6% to just over USD 3,200 per tonne. The gains for lead and tin were somewhat lower at 2.3% each. Metal prices are benefiting from increasing China optimism following the far-reaching opening from the Corona restrictions. In addition, the Chinese central bank has promised further support measures for households and businesses. An important target of these measures seems to be the real estate market. For example, the temporary reduction of mortgage rates on first homes was extended by the central bank last week.

In addition, the authority is expected to ease the financing of real estate projects. A relaxation of the strict debt and cash flow limits for property developers is being considered. These were the main reason for the slump in the property market (see also Daily Foreign Exchange of 9 January). A recovery of the Chinese real estate market would boost metal demand. Metal prices are receiving an additional boost from LME inventories, which have fallen to multi-year lows. Aluminium stocks held in LME warehouses are again approaching the 22-year low of August, zinc stocks are at their lowest level since August 1989 and lead stocks are only just above the 15-year low of November. A high number of cancelled warehouse receipts also points to further destocking in these three metals.

Source: Commerzbank Research, Photo: Fotolia