LONDON: Copper prices edged lower for a second day on Wednesday, weighed down by weak demand due to the absence of China, the biggest consumer, where markets are closed for a week-long Lunar New Year holiday.
Copper has rallied more than 10% in early January, reaching a seven-month high of $9,550.50 a tonne on Jan. 18, as the dollar weakened and speculators bet 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.
Benchmark three-month copper on the London Metal Exchange (LME) was down 0.1% at $9,310 a tonne at 1721 GMT.
Prices of the metal used in electrical wiring have barely changed since Jan. 19.
While Chinese demand should rise in the coming months, supporting prices, it could remain weak for some time after the New Year period, said Ian Roper, an analyst at Astris Advisory Japan.
This could lead to large increases in metal inventories in China and raise the risk of a drop in prices in the short term, he said on a webinar organised by brokers Marex.
“I do worry that things have overshot ... the key really is going to be how quickly Chinese activity levels pick up after the new year,” he said.
Supply fears are also supporting copper prices. Social unrest in Peru, the world’s second-biggest copper producer, has raised fears of disruption at mines.
And in Chile, the largest producer, a government report showed that copper production will grow at a slower rate this decade than previously hoped.
In other metals, LME aluminium was flat at $2,651.50 a tonne, nickel was up 1.8% at $29,285, lead rose 2.5% to $2,180 and zinc gained 1.2% to $3,470.
Tin was 3.2% higher at $30,925 after reaching $31,230, its highest since June. Prices of the metal used in solder have risen nearly 25% this month.