Copper retreats on renewed worries about China COVID curbs
LONDON — Copper prices extended losses on Thursday, weighed down by a stronger dollar and demand concerns after a flare up in COVID-19 cases in top metals consumer China.
Three-month copper on the London Metal Exchange dropped 2% to $8,125 a tonne by 1700 GMT, after easing 1% on Wednesday.
U.S. Comex copper futures fell 2.3% to $3.69 a lb.
A jump in domestic COVID-19 cases renewed concerns over more lockdowns in China, sending its stocks lower on Thursday.
Copper touched near five-month highs on Monday on news that China had relaxed some COVID restrictions and had taken steps to shore up the country’s troubled property sector.
“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.”
Also weighing on the market was a stronger dollar index after solid U.S. retail sales data cast doubt on market bets that the Federal Reserve might pause its aggressive interest rate hikes.
Hawkish remarks from Fed official James Bullard on Thursday 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 pressuring 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, sliding 8.5% to $25,190 a tonne, after tumbling 9% on Wednesday in volatile and thin trading that prompted the exchange to step up monitoring. The LME announced it was hiking nickel margins by 28%.
LME aluminum shed 0.9% to $2,391 a tonne, zinc fell 1.8% to $2,998, lead eased 1.4% to $2,140 and tin slid 5% to $22,450.
For the top stories in metals and other news, click or ($1 = 7.1246 yuan) (Reporting by Eric Onstad; Editing by Shounak Dasgupta, Devika Syamnath and Vinay Dwivedi)
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