Aluminium, copper drop on uncertainty over China reopening

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LONDON — Aluminum and copper prices slipped on Tuesday, crimped by a firmer dollar and uncertainty about the easing of COVID-19 restrictions in top metal consumer China.

Three-month aluminum on the London Metal Exchange eased 0.9% to $2,501 a tonne by 1710 GMT after declining 0.9% on Monday, while copper dipped 0.2% to $8,376.

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Aluminum has gained about 12% since the beginning of November, largely on hopes for improved metals demand as China relaxes tough coronavirus curbs, which have depressed economic growth.

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Residents of China’s capital were allowed into parks, supermarkets, offices and airports without a negative COVID-19 test on Tuesday, the latest in a mix of easing steps nationwide after unprecedented protests against a tough zero-COVID policy.

“We are in a wait-and-see mode since the reopening in China will take time. We may have already built in some of the optimism into the price, so now we need to see the actual facts on the ground start to improve,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Also weighing on the market was a firmer dollar index following its biggest rally in two weeks after strong U.S. services data fueled expectations for higher interest rates.

A stronger dollar makes greenback-priced commodities more expensive to buyers using other currencies.

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Copper touched a three-week peak on Monday, buoyed by optimism about China.

“Copper could still mount another challenge to the upside, especially if news out of China continues to improve, but there’s the question of how much energy is left in the market at this time of year,” Hansen said.

Capping the upside of copper were signs of less physical tightness, including a fall on Monday of the Yangshan copper premium to its lowest since July 22 at $72.50 a tonne, indicating weakening demand for imported copper into China.

LME zinc gained 0.3% at $3,136.50 a tonne after further falls in LME inventories, which have halved since the start of September.

In other metals, LME nickel climbed 2.1% to $29,280 a tonne and tin rose 1.5% to $24,810, but lead slipped 1.3% to $2,209.50.

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($1 = 6.9950 yuan) (Reporting by Eric Onstad; Editing by Anil D’Silva, Louise Heavens, Alexandra Hudson and Richard Chang)