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The copper price climbed for the fourth day as China’s success in containing a sprawling covid-19 outbreak shored up confidence in the demand outlook.

Indicators in the physical market suggest the country’s appetite for copper is picking up rapidly.

Copper for delivery in September rose 1% from Tuesday’s settlement price, touching $4.3025 per pound (9,465 per tonne) on the Comex market in New York.

There are also signs that the slump in prices last week is enticing consumers back to the market, while simultaneously discouraging suppliers of copper scrap from making sales.

By the end of last week, high-grade copper scrap in China was trading at a premium to refined metal, indicating that scrap supply had rapidly dried up, according to BMO Capital Markets. In turn, high scrap prices and a lack of availability could boost demand for refined metal.

“That dynamic is obviously unusual and doesn’t make economic sense, but it’s a sign that perhaps the selloff was getting ahead of fundamentals,” Colin Hamilton, managing director for commodities research at BMO, told Bloomberg.

“We do have some initial signs that Chinese buyers have stopped destocking and are coming back to the market.”

Click here for an interactive chart of copper prices

Aluminum also moved closer to a decade-high above $2,700 a tonne, propelled by a global economic recovery that is expected to fuel purchases of goods ranging from automobiles to toasters.

Copper prices are expected to be supported by the potential for near-term supply disruptions in Chile, a recovery in ex-China demand and indications of continued Chinese government support for the economy and employment, said S&P Global.

“The tightness in the copper concentrate market is also showing signs of relief with treatment and refining charges rising over recent months, following healthy growth in Latin American mine output. Our average LME three-month copper price forecast for the third and fourth quarters come in at $9,236 a tonne for the third quarter and $8,919 a tonne for the fourth quarter,” S&P principal analyst Ronnie Cecil said in a note.

“Global mine supply growth is expected to weigh on copper prices in 2022 and 2023, with prices dropping to $8,453 per tonne. By 2024 and 2025, however, more profound deficits and more substantial prices are expected to emerge as copper suppliers struggle to keep up with development growth.”

(With files from Bloomberg)