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Copper prices surged to their highest in nearly three weeks on some signs that the coronavirus pandemic may be slowing and on hopes that heavy bouts of stimulus will repair economic damage.

Some analysts were wary, however, of the rally that swept industrial metals higher for a second day along with other risk assets such as stocks.

“I don’t think that we’re out of the woods yet. Demand issues are more severe than the reduction of supply and I think it’s too early to say that it’s all okay now. I won’t be surprised to see lower or even much lower prices in the next few weeks,” said Daniel Briesemann at Commerzbank in Frankfurt.

“Once we get more data on either the economic situation in general or the demand side of the metals, I think this data will be devastating and that could put the rally to an end.”

Three-month copper on the London Metal Exchange climbed 3.3 per cent to $US5,045 a tonne, its highest since March 18.

Mainland China on Tuesday reported a drop in new coronavirus cases while data showed a slowdown of reported new infections in Italy and hard-hit parts of the United States.

“Now, as cases in Europe appear to get better and Chinese are out in the millions to tourist attractions …, the market is cheering via this relief rally,” one base metals trader said.

“The market is still waiting for China’s fiscal stimulus. If patience wears out, this could very much be a bull trap.”

Spot premiums for physical aluminium have fallen because of weak demand, with U.S. levels down 20 per cent in the past two weeks, Briesemann said.

“The low aluminium premiums and, above all, the low aluminium prices are making life increasingly difficult for producers.”

LME cash aluminium’s discount to the three-month contract rose to $US36 a tonne on Tuesday, its highest since September 2018, indicating healthy supplies.

LME aluminium rose 0.6 per cent to $US1,481 a tonne.

The rebound in LME zinc prices is to run out of steam, Commerzbank technical analyst Axel Rudolph said in a note, adding that it is heading back up towards the $US1,970 to $US2,066 resistance zone.

LME zinc climbed 1.4 per cent to $US1,931 a tonne, nickel rose 1.6 per cent to $US11,470, lead surged 3.7 per cent to $US1,736.50 and tin jumped 3.6 per cent to $US14,800 a tonne.

Both zinc and tin reached their highest since March 17.