London copper recoups losses fuelled by Omicron worries

London copper prices rose on Monday, recouping some of the losses fuelled by the newly identified and possibly vaccine-resistant coronavirus variant late last week.

Three-month copper on the London Metal Exchange rose 1.4% to $9,591 a tonne by 0610 GMT. The most-traded January copper contract on the Shanghai Futures Exchange fell 1.2% to 70,200 yuan ($10,996.59) a tonne, tracking Friday's sell-off in London.

The World Health Organization warned that deciding the severity level of the Omicron variant could take "days to several weeks" in the absence of information that its symptoms differed from those of other variants.

The variant has been detected in Australia, Britain, Canada, Germany and Hong Kong after it was identified first in South Africa.

Meanwhile, a South African doctor said symptoms of the new virus variant were so far mild and could be treated at home.

"If the variant raises severe concerns, this could delay financial tightening, which would be favourable for industrial metals," said ANZ analyst Soni Kumari, adding inventories and supply constraints were still be supportive in the short-term.

The new strain has spurred some concerns that it could derail growth in the world's leading economies, and China, which is maintaining a COVID-zero strategy, could be particularly vulnerable, Kumari said.

Fundamentals

• The premium of LME cash zinc over the three-month contract jumped to $130.50 a tonne, its highest since June 2019, indicating tightening nearby supplies. Inventories of the metal stood at 163,275 tonnes last week, their lowest since July 2020.

• LME stocks of nickel were at their lowest since December 2019 at 115,446 tonnes.

• LME nickel climbed 1.5% to $20,190 a tonne, zinc gained 0.3% to $3,205.5, aluminium rose 0.7% to $2,632.5 a tonne, lead was 0.9% higher at $2,290 and tin gained 1.2% to $39,100 a tonne.

  • ShFE aluminium was down 0.8% at 19,130 yuan a tonne, nickel fell 1.2% to 149,770 yuan a tonne, lead rose 0.8% to 15,455 yuan a tonne, zinc slipped 2.9% to 22,920 yuan a tonne.

  • A resurgence of COVID-19 infections in northern China has forced two small cities to suspend public transport and tighten control over residents' movement, as the country has showed no willingness to go easy on local outbreaks.