Copper falls on Europe coronavirus lockdowns, firmer dollar

HANOI: Copper prices declined on Wednesday as concerns over coronavirus lockdowns in Europe pushed up demand for the dollar and dented the global economic recovery progress.

Copper, used widely in construction, manufacturing and power, is often used as a gauge of global economic health.

The US dollar approached a four-month high on Wednesday, making greenback-priced metals more expensive to holders of other currencies.

Three-month copper on the London Metal Exchange fell 0.4% to $8,940.50 a tonne by 0605 GMT, and the most-traded May copper contract on the Shanghai Futures Exchange decreased 1% to 66,430 yuan ($10,179.91) a tonne.

Escalating tensions between China and the West, as well as potential US tax hikes also hit sentiment and led to investors buying into safe-haven dollar.

"Renewed restrictions in Europe and other macro news are denting market sentiment," said ANZ analyst Soni Kumari, adding that Chilean miner Antofagasta avoiding a strike at its Los Pelambres copper mine also pressured prices.

However, copper prices remain sensitive to any mine supply risk, while synchronised economic recovery and green push should provide a broader support for demand despite the ongoing financial tightening in China, Kumari added.

FUNDAMENTALS

• LME nickel fell 0.3% to $16,095 a tonne, zinc dropped 0.6% to $2,820.50 a tonne while ShFE nickel declined 2% at 120,710 yuan a tonne and ShFE zinc was down 1.6% at 21,680 yuan a tonne.

• LME cash copper was traded at a discount of $1 a tonne to the three-month contract, flipping from a premium since February, as inventories in LME warehouses leaped 65% this month.