Copper falls on China COVID protests but dollar supports

Copper prices fell on Monday as worries about demand in top consumer China were reinforced by protests against the country’s strict COVID-19 curbs, but a weaker dollar helped to support sentiment.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was down 0.5% at $7,966 a tonne by 1036 GMT.

Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China’s stringent COVID restrictions flared for a third day and spread to several cities.

“How long will the protests last, how will the Chinese government react? There’s a lot of uncertainty about China,” one metals trader said. “Growth in Europe and the United States is sluggish and the outlook is worse.”

Industrial metals markets will scrutinise surveys of purchasing managers in China’s manufacturing sector, where activity is expected to have contracted further this month.

Chinese authorities have introduced a range of measures in an attempt to to revive growth, but the recovery has been stifled by COVID woes and a slowdown in the global economy.

A weaker U.S. currency makes dollar-priced metals cheaper for holders of other currencies, which could boost demand. This relationship is used by funds to generate buy and sell signals from numerical models.

Copper prices have recently come under pressure from risng stocks MCUSTX-TOTAL in LME registered warehouses, which have increased by 17% since Nov. 10 to 91,200 tonnes. Metal not already earmarked for delivery and available to the market has climbed to 84% of total stocks, from 50% earlier this month.

Receding concerns over copper supplies on the LME market have created a discount for cash metal over the three-month contract CMCU0-3, having been at a premium in August, September and October.

Meanwhile, the discount for cash lead over the three-month contract CMPB0-3 has started to narrow as focus switches to stocks MPBSTX-TOTAL at 15-year lows and large holdings of warrants and cash contracts 0#LME-WHT.

Three-month lead CMPB3 was up 0.7% at $2,923 a tonne.

Aluminium CMAL3 dipped by 0.1% to $2,360, zinc CMZN3 added 0.1% to $2,923, tin CMSN3 was up 0.1% at $22,265 and nickel CMNI3 slipped 0.4% to $25,325.
Source: Reuters (Reporting by Pratima Desai Editing by David Goodman)