LONDON: Copper prices briefly surged on Wednesday to the highest in more than two months after Russia ordered a major retreat in Ukraine, raising hopes by investors that the conflict may be nearing an end, but the gains fizzled out.
Traders said the news about Russia announcing a withdrawal from the occupied Ukrainian city of Kherson spurred a burst of buying by computer-driven funds.
Three-month copper on the London Metal Exchange (LME) jumped to an intraday peak of $8,214 a tonne, the highest since Aug. 26.
In volatile trading, copper moved back into the red and was down 0.3% at $8,091 by 1600 GMT after a Ukrainian official cast doubt on the announcement by the Russian defence minister.
LME copper climbed 2.5% on Tuesday, but was dragged down on Wednesday by a stronger dollar, weak economic data and rising COVID-19 cases in top metals consumer China.
China’s factory gate prices for October dropped for the first time since December 2020 while the southern manufacturing hub of Guangzhou brought back mass testing to control the city’s worst COVID-19 outbreak.
“Disappointing numbers from China this morning put downward pressure on metals prices,” said ING analyst Ewa Manthey.
“COVID-19 lockdowns in an already slowing Chinese economy have continued to dampen the demand outlook for copper and the wider base metals complex.” A stronger dollar also weighed on the market, making metals priced in the US currency more expensive to buyers using other currencies.
The dollar index bounced after touching its weakest in nearly two months a day earlier as traders awaited results from US elections and inflation data this week.
Copper stocks on the LME touched a seven-month low on Wednesday, having slid 44% over the last month.
Spreads in aluminium, however, indicated rising short-term levels of available metal.
The discount on LME cash aluminium against the three-month contract rose to $15.44 a tonne, compared with a premium of $14.50 about a month ago.
LME aluminium dropped 1.6% to $2,334.50 a tonne, zinc eased 2.7% to $2,851.50, but tin added 0.2% to $19,700, lead rose 0.8% to $2,070.50 and nickel climbed 1.7% to $24,410.