LONDON: Copper prices held steady on Tuesday as weak economic data from China, the metal’s biggest global consumer, punctured a speculator-driven rally.
Benchmark copper on the London Metal Exchange (LME) was up 0.3% at $9,132.50 a tonne at 1203 GMT, having touched a high of $9,257 last Friday.
Prices of the metal used in electrical wiring have surged 9% this month after China’s dismantling of economically damaging COVID-19 controls raised hopes that demand will revive.
In the short term, however, Chinese consumption is weak and likely to remain so as the country heads into the Lunar New Year holidays next week.
Copper rally falters as focus shifts back to weak demand
Chinese import premiums are falling and Shanghai exchange inventories are rising.
Data on Tuesday showed that China’s economy grew 3% last year, one of the weakest annual growth figures in nearly half a century, with factory output growing 1.3% year on year in December.
China’s population also fell for the first time in six decades, underlining its long-term economic challenges.
Asian and European shares dropped and the yuan slipped to a one-week low, making dollar-priced metals costlier in China.
Economists expect China’s economy to pick up in the coming months.
“We are heading for higher (copper) prices this year, but this is a marathon not a sprint,” said Saxo Bank analyst Ole Hansen, predicting a temporary pause or reversal of the rally.
Speculators have flooded into the market, swelling their net long position in COMEX copper futures to its largest since April.
Open interest in industrial metals increased by about $18 billion last week for the biggest weekly rise since Russia invaded Ukraine, JPMorgan analysts said.
LME aluminium was down 0.9% at $2,597.50 a tonne after data showed that China’s annual output last year rose 4.5% to a record high of 40.21 million tonnes.
Benchmark zinc was down 0.5% at $3,287.50 a tonne, nickel rose 0.1% to $27,245, lead gained 0.7% to $2,233.50 and tin was down 1.8% at $27,950.
Source: Brecorder
