Prices of Shanghai metals fell on Tuesday as the rapid spread of coronavirus infections and shrinking factory activities in top consumer China heightened traders’ concerns of tepid demand.
The most-traded February copper contract on the Shanghai Futures Exchange was down 0.5% at 65,800 yuan ($9,554.09) a tonne, as of 0654 GMT, aluminum dropped 2.4% to 18,240 yuan a tonne and zinc shed 0.9% to 23,500 yuan a tonne.
SHFE nickel was down 0.3% at 228,520 yuan a tonne, tin was flat at 209,170 yuan a tonne and lead fell 0.5% to 15,855 yuan a tonne.
China’s official purchasing managers’ index (PMI) showed factory activity shrank for the third straight month in December and at the sharpest pace in nearly three years as COVID-19 infections swept through production lines across the country.
The private Caixin survey, believed to focus on smaller, export-oriented firms compared with the larger official PMI survey, also showed factory activity shrank at a sharper pace in December after Beijing’s abrupt reversal of anti-virus measures.
The industrial metals markets might not see improving demand and a price rally in the next few months as the headwinds of slow growth will likely dominate the economic landscape for some time.
“The consumption (of copper in China) is currently entering the seasonal consumption off-season,” said Huatai Futures in a report.
Yangshan copper premium
“But the recent disturbance to the domestic economy by the spread of the epidemic has begun to show signs of decline, and the economy is bottoming ou,” it added.
The dropping of China’s stringent “zero-COVID” measures had sparked some hopes for better economic activities in the world’s biggest metals consuming market.
Three-month copper on the London Metal Exchange (LME) rose 1.3% to $8,484 a tonne, reversing two sessions of losses.
LME aluminum increased 0.3% to $2,385 a tonne, tin advanced 2% to $25,300 a tonne, zinc was up 1.4% at $3,013 a tonne, while lead declined 0.9% to $2,272.50 a tonne.
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($1 = 6.8871 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Sherry Jacob-Phillips)