Firmer dollar, equities sell-off push Shanghai copper to 1-month low

HANOI: Shanghai copper prices hit their lowest in more than a month while other industrial metals also dropped, as a broader sell-off in global equities and a firmer US dollar made greenback-priced metals less appealing to holders of other currencies.

The sell-off in equities also hurt risk sentiment across assets on Thursday and raised concerns about liquidity in the financial markets.

The most-traded March copper contract on the Shanghai Futures Exchange dropped as much as 2% to 57,620 yuan ($8,895.82) a tonne, a level unseen since Dec. 23, 2020.

ShFE nickel declined 2.41% to 130,740 yuan a tonne at 0552 GMT and zinc lost 2.7% at 19,330 yuan a tonne.

Three-month copper on the London Metal Exchange edged 0.1% lower to $7,818 a tonne, and nickel fell 1.4% to $17,660 a tonne and tin shed 1% to $22,575 a tonne.

Asian shares slid, while the safe-haven dollar rallied as a sudden sell-off on the Wall Street and delays with coronavirus vaccines shook investor optimism.

"Fundamental is supportive but macro is not," said analyst He Tianyu of consultancy firm CRU Group, adding that demand for copper in top consumer China ahead of the Lunar New Year holiday has been better than the same period in previous years.

"The Chinese government encourages workers to celebrate the holiday locally. That means working days will be longer than before," he said.

FUNDAMENTALS

Yangshan copper premium rose to $72 a tonne, its highest since August 2020, SMM data showed.

LME cash aluminium traded at a $4-a-tonne discount from the three-month contract, flipping from three days in the premium zone, indicating that nearby supply tightness has eased.

LME zinc inventories leaped 55% in the previous two sessions to 294,500 tonnes, a level unseen since June 2017.

LME lead stockpiles fell to their lowest since July 2020 at 107,175 tonnes.