Copper prices slide as demand fears dominate

  • Prices of the metal used widely in the power and construction industries touched $8,238 on Friday for its highest since February 2013.
Updated 12 Jan, 2021

LONDON: Copper prices fell on Monday as demand concerns fuelled by surging coronavirus cases in top consumer China were reinforced by a stronger dollar and rising U.S.-China tensions.

Benchmark copper on the London Metal Exchange (LME) was down 3.4pc at $7,852 a tonne at 1703 GMT.

Prices of the metal used widely in the power and construction industries touched $8,238 on Friday for its highest since February 2013.

"There has been a fair amount of profit-taking on long positions," one copper trader said. "The dollar and China's coronavirus cases triggered the sell-off, but copper has come a long way since (early) last year."

Copper prices fell to four-year lows of $4,371 in March last year as coronavirus lockdowns hit manufacturing activity.

COVID-19: Mainland China registered its biggest daily increase in coronavirus cases in more than five months as new infections in Hebei province jumped and a county in northeastern Heilongjiang province moved into lockdown.

"Aside from Hebei's battle with the new COVID-19 strain, cold weather is threatening to slow China's industrial production if only short term," Marex Spectron analysts said in a note.

"Then we also have Chinese new year holidays. ahead of which Chinese risk appetite and physical demand should lessen."

China's Lunar new year holiday cover Feb. 11-17, but factory activity starts to slow before the break and takes time to ramp up afterwards.

DOLLAR: A stronger U.S. currency makes dollar-denominated metals more expensive for holders of other currencies, which could subdue demand.

TAIWAN: China condemned the United States for scrapping curbs on interactions with Taiwan officials, saying that nobody could prevent the country's "re-unification".

ALUMINIUM: The discount for the cash aluminium contract over the three-month contract flipped briefly to a premium on concern about supplies on the LME market.

Supply worries have been fuelled by falling stocks of aluminium in LME-registered warehouses and large holdings of warrants.

Three-month aluminium was down 0.6pc at $2,010.

OTHER METALS: Zinc slipped 1.9pc to $2,760 a tonne, lead ceded 1.4pc to $1,974, tin was down 1pc at $20,780 and nickel slid 3.2pc to $17,105.

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