LONDON: Copper prices slipped on Monday as the market focused on poor demand prospects, particularly in top consumer China, while outflows from London Metal Exchange (LME) warehouses and a softer dollar provided support.
Benchmark copper on the LME was down 0.2% at $8,338 a metric ton by 1053 GMT. Traders said activity is subdued and is likely to remain so until after the Chinese Lunar New Year holiday in February.
China’s troubled property sector and a slowdown in manufacturing around the world has hit prices of copper and other industrial metals over the past year.
“China’s property market has weakened at a rate we haven’t seen in decades. Globally we are in one of the longer manufacturing downturns in more than 40 years,” said Jay Tatum, portfolio manager at Valent Asset Management.
A weaker U.S. currency makes dollar-priced commodities cheaper for holders of other currencies, which could boost demand.
China’s 2023 imports of copper concentrate from Australia highest since 2021
Traders said moves by China’s state-owned banks to support the yuan by selling the dollar was a plus for base metals, which can be highly correlated with the Chinese currency.
Stock of copper in LME-approved warehouses have dropped 18% to 156,750 tons since the middle of last October. Cancelled warrants - metal earmarked for delivery – at 21% of the total, compared with 12% on Jan. 11, suggest that more copper will leave the LME system.
On the technical front, initial resistance for copper is at $8,370 followed by $8,450, the 200 and 50-day moving averages respectively. Support is at $8,290, the 100-day moving average.
Elsewhere, aluminium fell to $2,156 a ton, its lowest since Dec. 14, as traders priced in expectations of surpluses, partly because of record production in China despite weather-related curbs in the country’s southwest.
Aluminium was last down 0.4% at $2,157 a ton.
In other metals, zinc lost 0.6% to $2,447 a ton, lead fell 0.4% to $2,098, tin gained 0.1% to $25,330 and nickel was down 0.5% at $15,950.
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