LONDON: Aluminium prices dropped on Monday in a sell-off sparked by large deliveries to warehouses approved by the London Metal Exchange (LME) while copper was supported by a weaker dollar despite worries about demand in top consumer China.
Benchmark aluminium was down 2.6% at $2,247 a tonne as of 1633 GMT, while copper was up 0.1% at $7,548 a tonne.
Aluminium stocks in LME warehouses jumped by 65,825 tonnes to 433,025 tonnes on Friday.
“There was a big jump in (aluminium) inventories. Some people are thinking some of that will be Russian,” one metal trader said. “For copper, the key is China, which doesn’t look too healthy at the moment.
Consumers shunning Russian-origin aluminium have fuelled fears that it will be delivered into the LME system and distort prices.
Significantly higher aluminium stocks have also narrowed the premium for cash metal over the three-month contract.
Traders said higher aluminium inventories may be for delivery against contracts maturing this week.
Elsewhere, the softer US currency, which makes dollar-priced metals cheaper for holders of other currencies, helped lift copper, as did a drop in stocks in LME warehouses, traders said.
Copper stocks in LME warehouses fell by 2,700 tonnes while cancelled warrants, or metal earmarked for delivery, at 38% suggest that more metal will be sent out over the coming days and weeks.
Dominating the overall mood in industrial metals markets, however, was uncertainty about Chinese demand.
Chinese President Xi Jinping reiterated the country’s COVID-19 stance when he kicked off the Communist Party Congress on Sunday, in contrast to market expectations of easing of such curbs.
China has delayed the release of economic indicators scheduled for publication this week, including third-quarter gross domestic product data due on Tuesday, according to an updated calendar on the statistics bureau’s website.
In other metals, zinc was down 2.9% at $2,856 a tonne, lead lost 0.4% to $2,033, tin fell 1.1% to $19,700 and nickel was little changed at $21,777.