Home Business Base metals slip as China’s COVID curbs spark demand worries

Base metals slip as China’s COVID curbs spark demand worries

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Industrial metal prices slipped on Monday as fresh COVID-19 curbs in top consumer China clouded the demand outlook, while a stronger dollar added to the downbeat mood.

Three-month copper on the London Metal Exchange was down 0.7% at $8,019.50 a tonne, as of 0713 GMT, after hitting its lowest since Nov. 8 earlier in the session.

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The most-traded December copper contract on the Shanghai Futures Exchange ended daytime trading down 1.3% to 65,030 yuan ($9,079.61) a tonne.

“It is just the demand destruction story again, so less consumer spending, more gloomy outlook,” a Singapore-based metals trader said, adding COVID deaths in China were leading to speculation that more restrictions will come into place.

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In the long term, copper will stay supported and run higher on signs of easing of restrictions and stimulus, and due to lower inventories, the trader added.

Beijing’s most populous district urged residents to stay at home on Monday, while the capital reported an increase in COVID-19 cases and two deaths. Local authorities in the Baiyun District of the southern Chinese city of Guangzhou also locked down the area for five days as cases continued to mount.

Asian share markets turned hesitant, as investors fretted about the economic fallout from fresh COVID-19 restrictions in China.

The dollar index rose 0.4% against its rivals, making greenback-priced metals costlier for buyers holding other currencies.

Latest data shows copper stocks in LME warehouse have halved from May to 89,925 tonnes as of Friday.

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Among other metals, LME aluminum fell 1.4% to $2,396.50 a tonne, lead was down 0.8% to $2,135 a tonne, and zinc shed 1.5% to $2,986.50 a tonne.

LME tin lost 3.8% to $21,800 a tonne. Expect tin prices falling further to $18,000 a tonne by the first quarter of 2023 due to recovery in output and slowdown in consumer goods spending, analysts at Citi said in a note.

SHFE tin fell 2.9% to 177,650 yuan a tonne, nickel declined 0.9% to 197,130 yuan a tonne, lead eased 0.1% to 15,650 yuan a tonne, zinc was down 0.4% to 24,205 yuan a tonne and aluminum lost 0.7% to 18,945 yuan a tonne.

For the top stories in metals and other news, click or ($1 = 7.1622 Chinese yuan renminbi) (Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich, Eileen Soreng, and Uttaresh.V)


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