LONDON: Copper prices fell on Monday as demand concerns fuelled by surging coronavirus cases in top consumer China were reinforced by a stronger dollar and rising US-China tensions.
Benchmark copper on the London Metal Exchange (LME) was down 3.4% at $7,852 a tonne at 1703 GMT. Prices of the metal used widely in the power and construction industries touched $8,238 on Friday for its highest since February 2013.
“There has been a fair amount of profit-taking on long positions,” one copper trader said. “The dollar and China’s coronavirus cases triggered the sell-off, but copper has come a long way since (early) last year.”
Copper prices fell to four-year lows of $4,371 in March last year as coronavirus lockdowns hit manufacturing activity.
COVID-19: Mainland China registered its biggest daily increase in coronavirus cases in more than five months as new infections in Hebei province jumped and a county in northeastern Heilongjiang province moved into lockdown.
“Aside from Hebei’s battle with the new COVID-19 strain, cold weather is threatening to slow China’s industrial production if only short term,” Marex Spectron analysts said in a note.
“Then we also have Chinese new year holidays ahead of which Chinese risk appetite and physical demand should lessen.”
China’s Lunar new year holiday cover Feb. 11-17, but factory activity starts to slow before the break and takes time to ramp up afterwards.
A stronger US currency makes dollar-denominated metals more expensive for holders of other currencies, which could subdue demand.
China condemned the United States for scrapping curbs on interactions with Taiwan officials, saying that nobody could prevent the country’s “re-unification”.
The discount for the cash aluminium contract over the three-month contract flipped briefly to a premium on concern about supplies on the LME market.
Supply worries have been fuelled by falling stocks of aluminium in LME-registered warehouses and large holdings of warrants.
Three-month aluminium was down 0.6% at $2,010.
Zinc slipped 1.9% to $2,760 a tonne, lead ceded 1.4% to $1,974, tin was down 1% at $20,780 and nickel slid 3.2% to $17,105.
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