LONDON: Copper prices edged lower for a second day on Wednesday, weighed down by a stronger dollar and the absence of China, the biggest consumer, where markets are closed for a week-long Lunar New Year holiday.
Copper rallied strongly in early January, reaching a seven-month high of $9,550.50 a tonne on Jan. 18, as the dollar weakened and speculators bet that the end of China’s COVID-19 restrictions would boost economic growth and metals demand.
But prices lost momentum as Chinese markets closed on Jan. 20.
The yuan, which strengthened nearly 10% against the dollar between November and mid-January, boosting dollar-priced metals by making them more affordable for Chinese buyers, weakened in the days before the holiday began.
Benchmark three-month copper on the London Metal Exchange (LME) was down 0.2% at $9,298.50 a tonne at 1208 GMT.
Prices of the metal, used in electrical wiring, have barely changed since Jan. 19 but are still up around 11% this month.
The market is waiting for data from China after its New Year celebrations, said WisdomTree commodity strategist Nitesh Shah. “(This) could be nice catalyst for prices to break away from this consolidation range,” he said.
Even if Chinese growth revives, the global economy is expected to face a challenging year marked by geopolitical tensions, high inflation and the energy crisis, according to the Eurochambres global economic survey published on Wednesday.
However, copper inventories in global exchange warehouses are low and social unrest in Peru, the world’s second-biggest copper producer, has raised fears of disruption to supplies.
In other metals, LME aluminium fell 0.8% to $2,630 a tonne, nickel was up 0.7% at $28,970, lead was down 0.6% at $2,114, zinc slipped 0.5% to $3,411 and tin was 0.5% higher at $30,100.