Copper retreats on Chinese demand uncertainty

Copper prices fell on Wednesday as an economic and demand slowdown in China pressured the market ahead of a long public holiday in the top consumer.

Three-month copper on the London Metal Exchange (LME) CMCU3 fell after a short-lived rebound in the previous session. The red metal prices have registered a 2.9% loss so far this year. It was last trading at $8,390 per metric ton in open official rings.

“Copper has been range-bound lately with the market weighed by slowdown of Chinese economy and a potential for improved demand from green energy sector,” Ewa Manthey, commodities strategist at ING told Reuters.

Demand concerns weighed on near-term prices to create record discounts for the cash contract over three-month contract. The discount, or contango, on the LME reached $108.75 a metric ton on Wednesday. It set a fresh record high of $112.26 on Feb. 5.

Copper prices are unlikely to move higher until more signals of sustainable recovery are seen in China, Manthey added.

But clarity may not come until China’s January-February economic data is published in March.

For other metals, zinc prices CMZN3 dipped to a 9-week low of $2,396.5 a ton after stock data came in to show fresh arrival of 9,900 tonnes at LME’s registered warehouse in Singapore. It last traded at $2,414 a ton.

A recent Reuters poll of analysts expected a 2024 surplus of 300,000 tonnes in the galvanizing metal, mainly used in protecting steel from corrosion.

A softer U.S. dollar, however, provide some support to greenback-priced metals to make them more attractive for holders of other currencies.

LME aluminium CMAL3 edged 0.1% lower at $2,228 a ton, lead CMPB3 dropped 0.3% to $2,108.5, tin CMSN3 increased 0.5% to $25,300, while nickel CMNI3 rose 0.6% to $16,025.
Source: Reuters (Reporting by Julian Luk in London; Editing by Mrigank Dhaniwala and Louise Heavens)