Tuesday, November 29

Copper slips on renewed worries about China COVID curbs


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LONDON — Copper prices drifted lower on Thursday as investors reckoned that China’s easing of COVID-19 curbs were modest and would continue to curtail demand as the dollar strengthened.

Three-month copper on the London Metal Exchange slipped 1.4% to $8,180.50 a tonne by 1100 GMT after dropping 1% on Wednesday.

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Copper touched near five-month highs on Monday on news that the world’s top metals consumer China had relaxed some COVID-19 restrictions and had moved to shore up the country’s troubled property sector.

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Chinese stocks on Thursday, however, closed weaker after a flare-up in domestic COVID-19 cases renewed concerns over more lockdowns.

“We think the market got ahead of itself on the reopening front,” said Geordie Wilkes, head of research at broker Sucden Financial, adding that vaccination rates were relatively low in China.

“That doesn’t really lend itself to an economy that’s fully open … in the near term we’re expecting prices to correct to the downside.”

The most-traded December copper contract on the Shanghai Futures Exchange fell 0.3% to 66,510 yuan ($9,335.26) a tonne.

Also weighing on the market was a stronger dollar index after solid US retail sales data cast doubt on market bets that inflation is cooling and the Federal Reserve might pause its aggressive path of interest rate hikes.

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Hawkish remarks from Fed officials on Wednesday added to doubts about a shift in policy.

A firmer dollar makes greenback-priced metals more expensive to holders of other currencies.

Wilkes said weaker copper spreads indicated healthier supply while rising copper output in China was also pressing the market.

The benchmark LME copper spread, the difference between the cash and three month contracts, has expanded its discount to $35 a tonne, the biggest in eight months.

LME nickel extended losses – dropping 2.5% to $26,845 a tonne after tumbling 9% on Wednesday in volatile and thin trading that prompted the exchange to step up monitoring.

LME aluminum shed 0.8% to $2,393.50 a tonne, zinc fell 1.7% to $3,000.50, lead eased 0.5% to $2,159.50 and tin dropped 2% to $23,175.

For the top stories in metals and other news, click or ($1 = 7.1246 yuan) (Reporting by Eric Onstad; Editing by Shounak Dasgupta)



financialpost.com

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