Copper hits two-month low as demand fears dominate

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LONDON — Copper prices slipped to two-month lows on Wednesday as the market focused on slowing economic growth and demand while the dollar recovered from early losses.

Benchmark copper on the London Metal Exchange (LME) was down 1% at $8,239 a tonne by 1546 GMT after touching its lowest since Nov. 30 at $8,188. Technical support is around $8,150, where the 50-day moving average currently sits.

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Minutes of the U.S. Federal Reserve’s Dec. 13-14 policy meeting, scheduled to be released at 1900 GMT, could provide clues to future interest rate moves and dollar direction, a key variable behind moves in industrial metals prices.

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Surging COVID cases in top consumer China, meanwhile, have reinforced worries over demand that is already under pressure from weakening global industrial activity.

“Globally, it doesn’t look good for industrial metals,” one metals trader said, adding that optimism over China’s rapid easing of COVID retrictions remains is tempered by the number of infections.

A weaker U.S. currency provided some support for dollar-priced metals in morning trade. However, the release of U.S. data showing falling input prices for manufacturers buoyed the currency in the afternoon, exerting further pressure on industrial metals prices.

Also weighing on the base metals complex is China’s Lunar New Year holiday this month, when factories sometimes shut down for weeks.

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Aluminum prices fell 1% to $2,288 a tonne after hitting $2,279.50 for its lowest since Nov. 10.

Traders said part of the reason behind the sell-off in aluminum was sliding energy prices. Electricity accounts for a significant proportion of aluminum smelting costs.

Growing concern about demand for industrial metals is portrayed in the discounts, or contango, for cash metal over the three-month contracts for copper , aluminum , nickel and tin .

Zinc and lead , where the cash contract is trading at a premium, or backwardation, are bucking the trend because of low stocks.

Stocks of zinc in LME-registered warehouses are their lowest since August 1989 at 27,750 tonnes.

Lead stocks , at 25,150 tonnes, are hovering near 15-year lows hit in November.

Zinc ceded 0.6% to $2,983 a tonne, lead retreated 0.7% to $2,264 and tin was down 1.5% at $25,080.

Nickel lost 5% to $29,950 after jumping more than 6% on Tuesday to three-week highs. (Reporting by Pratima Desai Additional reporting by Enrico Dela Cruz in Manila Editing by Bernadette Baum and David Goodman)