Copper prices fell on Monday, as weak physical consumption prompted reassessment of how quickly and strongly demand would rebound in top consumer China following its COVID-19 restrictions removal last month.
The most-traded March copper contract on the Shanghai Futures Exchange fell 1.2% to 69,320 yuan ($10,262.79) a tonne by 0619 GMT as trading resumed after a week-long Lunar New Year holiday, while three-month copper on the London Metal Exchange dipped 0.7% to $9,197 a tonne.
Copper prices since mid-July 2022 have risen 28% in London and 33% in Shanghai, underpinned by hopes of demand recovery in China post dismantling of the “zero-COVID” policy.
However, physical copper demand remained tepid, as shown by falling premiums. On Friday, LME copper posted its first weekly fall since mid-December.
China’s factory activity in January is expected to have contracted more slowly than in December, a Reuters poll showed, with production hampered as workers continued to fall sick after the government relaxed rules.
“Copper prices have risen to a relatively high level, and the reality may be difficult to make a positive response in the short term,” Jinrui Futures said in a note.
“It is expected that copper prices may face a certain risk of a correction after the (New Year) festival.” However, a weaker dollar and supply threats in Peru where MMG Ltd’s Las Bambas mine would likely have to halt production from Feb. 1 due to a shortage of “critical supplies”, provided some support to copper prices.
Copper stumbles on stronger dollar, Chinese demand
LME aluminium fell 0.9% to $2,602.50 a tonne and tin dropped 3.5% to $29,750 a tonne, and lead declined 0.4% to $2,175 a tonne. SHFE nickel rose 2.7% to 220,100 yuan a tonne and tin jumped 2% to 236,650 yuan a tonne, while aluminium fell 0.7% to 18,975 yuan a tonne and zinc shed 1.9% to 24,130 yuan a tonne.
LME cash zinc was at a $25.25 per-tonne premium over the three-month contract, the highest in more than three weeks, as inventories fell to 17,675 tonnes, the lowest since at least 1998, based on Refinitiv Eikon data.