Chinese demand fears haunt copper market – Markets

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LONDON: Copper prices fell on Monday after China’s top consumer reaffirmed its tough COVID-19 restrictions and data from the top consumer boosted demand concerns, but falling stocks and a weaker dollar limited losses.

Benchmark copper on the London Metal Exchange fell 2.2% to $7,918 a tonne at 1703 GMT. Prices of the metal used as an indicator of economic health jumped more than 7%, the biggest one-day gain since January 2009, on Friday as traders cut short positions on rumors that China would ease its strict COVID measures soon.

“China’s zero COVID policy is not the only problem,” said Julius Baer analyst Carsten Menke. “Removing this policy will not fix the real estate market…wiring in buildings and households accounts for a large portion of copper demand.” China’s property market continued its slump in October, with private data showing house prices and sales tumbled, while trade data showed imports of raw copper and copper products fell by 1. 5% in October compared to the same period a year ago.

The zero-COVID approach and the country’s lockdowns have weighed on its manufacturing sector and hit demand for industrial metals.

“The easing of lockdowns ahead of winter – as covid infections in China rise – seems like an irrational bull case for investors,” Liberum analyst Tom Price said in a note.

However, falling stocks in LME-registered warehouses, which at 84,550 tonnes are down more than 40% since mid-October, are supporting copper prices on the exchange.

Canceled warrants – metal intended for delivery – at 46% of the total – further heighten concerns about tight copper supply in the LME market. This is reflected in the premium for cash on the three-month contract.

Another boost for industrial metals came from the decline in the US currency, which made dollar metals cheaper for holders of other currencies, potentially increasing demand and prices.

In other metals, aluminum fell 1% to $2,333 a tonne, zinc gained 0.2% to $2,880, lead rose 1.6% to $2,030, tin gained 1.3% to $19,110 and nickel fell 1.8% to $23,390.

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