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Copper falls on firmer dollar, low demand ahead of China holiday

By Kemal Pasha

Copper prices fell on Thursday, as the safe-haven dollar firmed on U.S. downturn concerns and physical metal demand slowed ahead of a long holiday in top buyer China.

Three-month copper on the London Metal Exchange fell 0.9% to $9,242 a tonne by 0707 GMT, aluminum declined 0.9% to $2,615 a tonne, zinc shed 1.3% to $3,360 a tonne, and tin dropped 3.1% to $28,200 a tonne.

Chinese markets will be closed next week to celebrate the Lunar New Year, leading to tepid purchases of metals.

Yangshan copper premium fell to $31.50 a tonne on Wednesday, its lowest since April 2022, indicating weakening demand for imported copper into China.

“As the Spring Festival is approaching, downstream inquiries and inventory replenishment are not strong. At the same time, the sharp rise in copper prices has made the wait-and-see sentiment stronger,” Huatai Futures said in a report.

Weak U.S. retail and manufacturing data on Wednesday stoked fears that the world’s top economy was headed for a recession, driving demand for the safe-haven dollar.

A stronger dollar makes greenback-priced metals more expensive for buyers holding other currencies.

However, LME copper was on track for a weekly gain and has risen 33% in the past six months on bets of a demand recovery in top consumer China after it removed COVID-19 restrictions and amid expectations of a slowdown in the pace of U.S. rate hikes.

Low copper inventories and unrest in Peru, the world’s second-biggest producer of mined copper, also supported prices.

The most-traded March copper contract on the Shanghai Futures Exchange was almost unchanged at 69,680 yuan ($10,276.98) a tonne, nickel increased 4.6% to 214,420 yuan a tonne and aluminum advanced 1.4% to 19,070 yuan a tonne.

SHFE lead fell 0.5% to 15,285 yuan a tonne, zinc edged up 0.3% to 24,265 yuan a tonne, while tin rose 0.8% to 228,630 yuan a tonne.

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($1 = 6.7802 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Subhranshu Sahu and Uttaresh.V)

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Kemal Pasha