Copper falls to nearly 3-week low on China demand worries, firm dollar

LONDON: Copper prices slid to their lowest in nearly three weeks on Thursday on a buoyant dollar and concern about demand in top metals consumer China.

Three-month copper on the London Metal Exchange shed 2.2% to $8,780.50 a tonne in official trading, having hit $8,702 a tonne, its lowest since March 5.

"Chinese demand worries and a stronger dollar - these are the two main macro factors that's causing a general loss of risk appetite across the whole commodity space," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"I still see this as a correction, a long overdue one, but if copper weakens much further, that's a general sign of ill health because copper has really been a fortress in terms of the outlook, one with the strongest fundamentals."

Technical support was at a recent low of $8,570 and at $8,550, the 50-day moving average, he added.

The most-traded May copper contract on the Shanghai Futures Exchange closed down 1.4% at 65,560 yuan ($10,033.52) a tonne, but off the 65,480 yuan hit earlier, its lowest level since March 11.

Global equities languished close to two-week lows while the safe-haven dollar hit a four-month high against the euro on Thursday as investors worried that Europe's COVID-19 response was lagging that of the United States.

LME cash copper was at a $4.25 a tonne discount to the three-month contract, its biggest discount since Jan. 21, as inventories in LME warehouses have jumped 64% so far this month.

The Yangshan copper premium fell to $64 a tonne, its lowest since Jan. 12, while latest SMM data showed bonded copper inventories were at their highest since July 2019 at 377,800 tonnes.

LME aluminium fell 1% in official activity to $2,235.50 a tonne, nickel declined 1.1% to $16,012, zinc shed 1% to $2,772, lead dropped 0.4% to $1,932 and tin was barely changed at $25,310.