LONDON: Copper and aluminium prices retreated on Thursday, weighed down by more coronavirus curbs in top metals consumer China, a firmer dollar and rising aluminium inventories.
Three-month copper on the London Metal Exchange dropped 1.5% to $7,676 a tonne by 1000 GMT after climbing 3.6% on Wednesday.
“People were starting to get a bit bullish yesterday with copper stocks tight, but it was overdone and also the dollar is stronger today, so the market is pulling back,” said Robert Montefusco at broker Sucden Financial.
Available LME copper inventories, those not earmarked for delivery, have tumbled 68% over the past three weeks.
But LME copper prices have slumped 21% so far this year, burdened by worries about a global recession and strict COVID-19 lockdowns in China that have dampened growth.
Copper slips as China’s yuan falls to lowest since 2008
China on Thursday reported a third straight day of more than 1,000 new COVID cases nationwide, spurring cities from Wuhan in central China to Xining in the northwest to double down on COVID-19 curbs.
At the same time, profits at China’s industrial firms fell at a faster clip in January-September as COVID-19 curbs and a property crisis continued to weigh heavily on factory activity.
“The economic weakness and subdued demand have cut producers’ price tolerance of raw materials,” a China-based copper product producer said.
A firmer dollar index also weighed on the market, making metals priced in the U.S. currency more expensive for buyers using other currencies.
LME aluminium slid 1.7% to $2,295.50 a tonne after climbing as much as 5.4% in the previous session.
The most-traded aluminium contract on the Shanghai Futures Exchange shed 0.4% to 18,565 yuan a tonne.
LME aluminium inventories continued to pile up on Thursday, LME data showed, having surged by 80% in less than three weeks to a six-month high of 587,100 tonnes.
Among other metals, LME zinc added 0.5% to $2,963.50 a tonne and tin rose 0.6% to $18,795, but nickel shed 1.9% to $22,235 and lead dipped 0.1% to $1,888.50.
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