Copper prices hit eight-week highs overnight as recovering economic activity in China after the coronavirus lockdowns boosted expectations of stronger demand and the country’s central bank signalled further stimulus.

Benchmark copper on the London Metal Exchange was down 0.3 per cent at $US5,258 at 1600 GMT. Prices of the metal used widely in the power and construction industries earlier touched $US5,370 a tonne, the highest since March 16 and a gain of more than 20 per cent since March 19.

“Base metals are reacting to signs of economic activity in China recovering and moving towards normal,” said Dan Smith, managing director at Commodity Market Analytics. “Chinese data is showing an improvement.”

New bank lending in China fell less than expected in April from the previous month while growth of broad money supply quickened, as the central bank ramped up policy support for the coronavirus-ravaged economy.

China’s monthly auto sales rose for the first time in almost two years as the country eased virus-related curbs and reopened for business.

China’s industrial production data for April due on Friday is expected to show a small rise compared with a contraction in March.

China’s central bank said on Sunday it will step up counter-cyclical adjustments to support growth and make policy more flexible to fend off financial risks.

On Monday, it lowered interest rates on its standing lending facility (SLF) in April.

Copper prices are likely to be capped by the risks of a second wave of COVID-19 infections in China and elsewhere limiting manufacturing activity again this year.

The Shanghai Futures Exchange (ShFE) will allow delivery of nickel briquettes against its nickel futures contracts later this year in response to rising demand for other forms of the metal, notably for electric vehicles (EVs).

Chinese stainless steel futures surged, hitting their highest level in more than nine months as domestic demand continued to pick up after coronavirus-related shutdowns.

Indonesia exported 4,220.59 tonnes of refined tin in April, down 28 per cent year-on-year.

Traders say declining exports from Indonesia are partly behind the draws on tin inventories in LME-approved warehouses, which at 4,745 tonnes are down nearly 40 per cent since early April.

The premium for the cash over the three-month tin contract at $US97 a tonne suggests concern about nearby supplies of the soldering metal on the LME market.

Three-month tin rose 0.2 per cent to $US15,255 a tonne.

Aluminium was up 0.7 per cent at $US1,495, zinc added 1.1 per cent to $US2,026, lead gained 1.8 per cent to $US1,673 and nickel rose 0.2 per cent to $US12,345 a tonne.