LONDON: Copper prices fell to their lowest in nearly two weeks as the dollar climbed and pessimism about demand in top consumer China was reinforced by renewed focus on the country’s troubled property sector.
Benchmark copper on the London Metal Exchange (LME) was down 0.75% at $8,418 a metric ton by 1114 GMT, having touched its lowest since Jan. 24 at $8,412.
A string of policies deployed by China over the past year to help to revive a property sector that accounts for a quarter of China’s GDP have done little to boost the market.
Part of the problem is Chinese banks’ aversion to extending fresh credit to the sector, highlighted by the liquidation of China Evergrande.
“Until China’s property sector shows signs of sustained recovery, base (metals are) going to remain under pressure,” one copper trader said, adding that the market was quiet ahead of next week’s Chinese Lunar New Year holiday.
Copper retreats on stronger dollar; tighter supply and China data limit losses
The trader also noted the strength of the dollar after U.S. non-farm payrolls data came in “so much stronger than expected”.
Expectations of imminent aggressive interest rate cuts by the U.S. Federal Reserve faded after the monthly U.S. jobs report on Friday.
A stronger U.S. currency makes dollar-priced metals more expensive for holders of other currencies.
Traders said that a doubling of copper stocks in warehouses monitored by the Shanghai Futures Exchange, to 68,777 tons, since early January was a seasonal occurrence.
Attention was also focused on mine closures and disruptions, including at First Quantum’s Cobre mine in Panama.
“Offering an element of support to prices are mining issues, which seem to grow in scope and complexity each year,” said Marex consultant Edward Meir.
Zinc prices, meanwhile, hit their lowest in 7-1/2 weeks at $2,418 a ton on weak consumption in China’s construction sector, a major consumer of steel galvanised with zinc. It was last down 1.2% at $2,422.
In other metals, aluminium slid 0.9% to $2,213 a ton, lead retreated 0.6% to $2,131, tin dropped 2% to $25,035 and nickel was down 0.6% at $16,135.
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