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By Eric Onstad
LONDON, Dec 12 (Reuters) – Copper prices slipped on Monday, weighed down by persistent worries about the economy in top metals consumer China as the market grapples with COVID-19 and uncertainty over U.S. interest rate hikes.
Three-month copper on the London Metal Exchange CMCU3 shed 1.2% to $8,451 a tonne by 1045 GMT after touching the highest in nearly six months on Friday.
Coronavirus symptoms are spreading rapidly in China after authorities began dismantling stringent measures against the disease, fuelling fears a wave in infections could heap pressure on its fragile health system and drive businesses to a halt.
“We can see that China is in a really poor state at the moment in terms of its economy. Things are turning up from quite a low level, so it’s a question of whether prices reflect where we are right now,” said Dan Smith, head of research at Amalgamated Metals Trading.
“We feel that we’re going to go lower in base metals over the next few weeks because of these problems in China.”
Many metals producers decided to retain COVID curbs in their factories to minimize infections and their impact on production.
The most-traded January copper contract on the Shanghai Futures Exchange SCFcv1 fell 1.2% to 66,030 yuan ($9,469.65) a tonne.
Also hitting sentiment was uncertainty over whether the U.S. Federal Reserve would ease the pace of interest rate hikes this week.
The European Central Bank and the Bank of England are also set to announce interest rate hikes during the week.
CITIC Futures said in a report that global central banks will likely stick with tight monetary policies, which will slow down global economic growth and subdue copper demand, against rising supply in the market.
It forecast LME copper prices to decline next year to an average of $7,700 a tonne, keeping rangebound between $6,900 and 8,500 a tonne.
Among other metals, LME aluminium CMAL3 lost 1.2% to $2,451 a tonne, nickel CMNI3 declined 0.4% to $29,325, lead CMPB3 eased 0.4% at $2,190 and tin CMSN3 slipped 0.5% to $24,175, but zinc CMZN3 added 0.1% to $3,243.
For the top stories in metals and other news, click TOP/MTL or MET/L
($1 = 6.9728 Chinese yuan)
(Reporting by Eric Onstad; Additional reporting by Siyi Liu and Dominique Patton in Beijing; Editing by Sherry Jacob-Phillips)
((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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