BEIJING: Prices of copper dipped on Tuesday, as surging COVID-19 infections in China hit its industrial activities and raised concerns over near-term demand outlook, though a weaker U.S. dollar limited losses.
Three-month copper on the London Metal Exchange was down 0.2% to $8,303.50 a tonne by 0737 GMT, reversing gains from the previous session that was supported by China’s pledge to boost its economy.
But the world’s top metals consumer is currently seeing a wave of surging infections after it relaxed COVID curbs, which market participants said affected Chinese industrial supply chains and logistics capability.
China reported five new COVID-19 deaths for Dec. 19, compared with two on the previous day, increasing the nation’s fatalities to 5,242 the National Health Commission said on Tuesday.
“Prices are falling as the economy struggles,” a Beijing-based futures trader said. “The whole supply chain is disrupted as more workers are getting infected.”
China’s business confidence fell to a near decade low, a survey by World Economics showed on Monday, reflecting the impact of surging COVID-19 cases on economic activity with the abrupt lifting of many pandemic control measures.
The most-traded January copper contract on the Shanghai Futures Exchange dipped 0.4% to 65,060 yuan ($9,319.72) a tonne.
The dollar index nudged 0.4% lower as the yen soared to a four-month peak after the Bank of Japan (BOJ) said it would review its yield curve control policy. A weaker dollar makes the greenback-priced commodity more attractive to non-dollar buyers.
Globally, risk asset markets were clouded by risk-off sentiment at the beginning of a likely low-volume, pre-holiday week, as reflected by a fourth straight drop in Wall Street on Monday.
Among other metals, LME aluminium climbed 0.5% at $2,372 a tonne, zinc dipped 0.1% to $3,009, lead edged 0.2% down to $2,155.50, while tin gained 1.2% to $23,575.
China’s Tsingshan Group is building a new plant for metal that can be delivered on the LME, Bloomberg News reported on Monday.
The world’s largest stainless steel and nickel producer is building a plant in Sulawesi, Indonesia, to produce 50,000 tonnes of refined nickel a year that is due to go into operation by next July, according to the report.
SHFE aluminium eased 0.4% at 18,590 yuan a tonne, zinc fell 2.1% to 23,445 yuan and nickel retreated by 0.8% to 215,280 yuan, while tin was unchanged at 191,480 yuan.
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