Copper has been making steady gains in recent months with prices hitting a 10-week high late last week as Chinese inventories dropped at their fastest rate in nearly eight months.

Benchmark copper on the London Metal Exchange (LME) rose to $US5,464 ($8358) per tonne before falling 4 per cent to $US5,242.35 per tonne on renewed tensions between the US and China, though this is still well above the three-year low of $US4,617.50 per tonne in March.

Reuters reported that copper inventories in warehouses tracked by the Shanghai Futures Exchange fell 15.8 per cent to 175,825t for the week ending May 22 compared to the previous week.

Thirty-day LME stocks have also slid down to 272,325t after a sharp rise from 227,025t to 282,675t earlier this month.

The AAP quoted SP Angel analyst John Meyer as saying that the threat of a second wave of COVID-19 infections appears to be receding while governments pump more funds into their economies.

“A key indicator here is oil, which has rallied as China and other parts of the world return to work,” he added.

However, the prospect of renewed trade tensions between the world’s two biggest economies is casting shade on copper prices.

“We know what trade tensions did all of last year. We don’t really want a repeat of that because it just damages sentiment more than it has already,” independent metals consultant Robin Bhar told AAP.

Copper is seen as a key indicator of how well the global economy is performing and its recent gains reflect the cautious optimism that China and a number of other countries could lead a faster economic recovery.

While China has not set a target for economic growth this year due to “great uncertainty regarding the COVID-19 pandemic and the world economic and trade environment”, it is still taking steps to mitigate the virus’ impact with a 3.6 trillion yuan ($771.4bn) injection into its economy.

Iron ore giant Fortescue Metals Group (ASX:FMG) has increased its interest in Canada’s Candente Copper Corporation (TSX:DNT) from 9.72 per cent to 19.92 per cent by subscribing for 27.5 million shares worth $C1.375m ($1.5m).

Candente is progressing development of its Canariaco project in Peru that has 8.9 billion pounds (4 million tonnes) of contained copper along with 1.97 million ounces of gold and 54 million ounces of silver.

Meanwhile, Sandfire Resources (ASX:SFR) is flagging a return to drilling at its Tshukudu project in the Kalahari Copper Belt in Botswana after the Botswana government announced a phased easing of COVID-19 restrictions.

The company says plans are underway for a staged restart of exploration activity that should see resource drilling resume at the A4 satellite discovery by early June.

Sandfire recently acquired a block of nine licences in Namibia from Kopore Metals (ASX:KMT), increasing its total footprint in the Kalahari to over 18,000sqkm.