Shanghai copper hits 1-week low as China imposes new virus curbs

HANOI: Shanghai copper prices on Tuesday fell to a one-week low on demand concerns amid new restrictions to prevent a resurgence in coronavirus cases in China, the world's biggest metals consumer.

The most-traded March copper contract on the Shanghai Futures Exchange fell as much as 2.5% to 57,960 yuan ($8,957.02) a tonne, its lowest since Jan. 5.

ShFE aluminium declined 2% to 14,845 yuan a tonne by 0517 GMT, nickel was down 2.4% at 126,960 yuan and zinc shed 1.9% to 20,745 yuan.

China reported 55 new virus infections on Monday, down from 103 the previous day for the biggest daily increase in more than five months, sparking concerns that China-led demand recoveries might be dampened due to restrictions to curb the outbreak.

"The increase in cases did spook markets in China. Copper's decline comes together with USD strength and the build up of steel inventories in China..., a reflection of (seasonal) industrial activity slow down," said a metals trader based in Singapore.

"We're at a healthy level. Down side is likely $50 on stronger USD while upside is $300, barring any further pandemic in China," said the trader, pointing to further stimulus prospects from the United States.

A stronger US dollar makes greenback-priced metals on the London Metal Exchange more expensive to holders of other currencies.

LME three-month copper advanced 0.7% to $7,915.50 a tonne, while aluminium fell 0.3% to $2,003.50 a tonne, nickel rose 1.2% to $17,290 a tonne and lead advanced 0.6% to $1,978.50 a tonne.

FUNDAMENTALS

Copper inventories in LME warehouses rose for the first time since Dec. 4, 2020 to 104,950 tonnes, while the discount of LME cash copper to the three-month contract expanded to $14.25 a tonne, its biggest since Jan. 4.

Rio Tinto-controlled Turquoise Hill Resources said Mongolia's government is considering terminating the companies' underground expansion of their Oyu Tolgoi copper mine project due to rising development costs.