Copper hovers around five-month low as fears of inflation, China’s growth fade

• Copper prices rebound from five-month low on LME, and stay mildly offered on Shanghai.
• China’s He reiterates “zero covid” policy, Fedspeak turns out mixed amid softer US inflation expectations.
• Risk catalysts can entertain traders ahead of China/US inflation data on Wednesday.

Copper prices remain sidelined after witnessing a heavy selling on Monday, as market sentiment improves during early Tuesday morning in Europe. The underlying catalysts could be linked to no major negatives from macro, neither concerning China nor Russia, as well as the market’s cautious optimism ahead of Wednesday’s key inflation data from the US and China.

That said, the most-active June copper contract on the Shanghai Futures Exchange was down 0.11% at 71,400 yuan ($10,623.93) as of 04:20 GMT. It’s worth noting that copper prices on the London Metal Exchange (LME) rebounds from a five-month high, as far as the three-month contract is concerned. With this, the LME copper rises around 0.50% with the latest price being $9,265.

On a different page, comments from China’s Vice Premier Liu He who reiterates the country’s dynamic covid zero policy and offers the much-needed relief to the commodity and Antipodean traders.

Also helping the markets to improve is the pullback of the US Treasury yields. That said, the US 10-year Treasury yields extend the week-start pullback from a 20-year high, down five basis points (bps) near 3.0% at the latest, amid anxiety over the Fed’s next move as Atlanta Fed’s Robert Bostic promoted a series of 50bps rate lifts. On the other hand, Richmond Fed President Thomas Barkin kept the 75 bps rate hike on the table. That said, the US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped the most in 10 months to retest early March levels on Monday.

Moving on, copper traders may remain sidelined around the multi-day low amid mixed concerns ahead of the key inflation from China and the US, up for publishing on Wednesday. Should the numbers suggest the need for tightening policies, copper prices may renew downside.