LONDON: Copper prices fell towards six-week lows on Tuesday as funds cut bets on higher prices ahead of a seasonal demand lull during the Lunar New Year holiday in China, which accounts for 50% of global consumption.
Benchmark copper on the London Metal Exchange (LME) was down 0.4% at $7,768 a tonne at 1707 GMT. Prices of the industrial metal dropped to $7,705 last week, their lowest since Dec. 23.
“The Chinese holiday is a time when manufacturing and demand typically slow for a few weeks,” said Quantitative Commodity Research analyst Peter Fertig.
However, China’s attempts to curb COVID-19 infections are likely to put a damper on next month’s Lunar New Year holiday, when hundreds of millions of people typically travel to their home towns.
Far fewer are expected to travel this year and many migrant workers have been asked to stay put, which could mean that industrial activity does not slow as much as in previous years.
Copper stocks in LME-registered warehouses stand at 74,225 tonnes, close to last September’s 15-year trough.
Low stocks have fuelled concern about availability on the LME market, creating a premium for cash copper over the three-month contract. The premium was last at $7 a tonne. Analysts said the military coup in Myanmar is unlikely to adversely affect global tin supplies.
“Most of the tin from Myanmar is produced in an autonomous region and is not directly under government control. The coup won’t have much impact on supply in the short term,” said Tom Mulqueen, analyst at Amalgamated Metal Trading.
However, the tin market is in deficit and that can be seen in LME stocks at 790 tonnes, near the record lows of May 2019. Supply concerns have helped to send the premium for cash tin over the three-month contract to record highs. Three-month tin was down 0.5% at $22,985, having earlier touched its highest since June 2014 at $23,435.
Aluminium was up 0.3% at $1,975 a tonne, zinc gained 0.2% to $2,577, lead ceded 0.6% to $2,025 and nickel lost 0.9% to $17,700.—Reuters
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