LONDON: Copper prices slumped on Friday, pressured by a firmer dollar and uncertainty about how soon Chinese metals demand will rise after the country dismantled strict COVID-19 controls.
Three-month copper on the London Metal Exchange (LME) eased 0.8% to $9,258 a tonne by 1700 GMT. US Comex copper futures dropped 1.3% to $4.21 a lb.
Copper has been mostly flat this week as markets in top metals consumer China were closed for the Lunar New Year holiday, but has rallied by 12% so far this year. The Shanghai Futures Exchange reopens on Monday.
Copper was slightly firmer in early thin trade on Friday, but went into negative territory after the dollar index extended gains in the wake of fresh US data on consumer spending and sentiment.
A stronger dollar makes commodities priced in the US currency more expensive for buyers using other currencies.
Any short-term correction, however, is not likely to deter bullish investors betting that the reopening of the world’s second-largest economy will spur economic activity and metals demand.
“My guess is that the market has a lot of upside left. There’s no crowded long trade; currently the positions are very light, so there’s still space to increase that,” said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.
Torlizzi rejected the views of some analysts and investors, who said the market has overshot because physical demand is weak and any recovery will take time.
“People are underestimating the China reopening because they are looking with a Western lens. I’m old enough to know that when the Chinese decide to accelerate their economy, they manage to do it,” Torlizzi said.
Low inventories have also been supporting the market, with LME copper stocks slipping on Friday to their weakest in more than 10 months.
Supply issues have been in focus, with output growth in top producer Chile expected to slow, a government report showed this week.
Among other metals, LME aluminium dipped 0.3% to $2,632 a tonne, tin slid 3.3% to $31,215, lead fell 0.8% to $2,187, nickel lost 1.9% to $28,875 and zinc fell 1.1% to $3,448.50.
Comments
Comments are closed for this article.