LONDON: Copper prices eased on Thursday on worries about weak demand as top metals consumer China prepares for a holiday and other economies slow down under the weight of high interest rates.
Three-month copper on the London Metal Exchange (LME) was down 0.5% at $9,278 a tonne at 1700 GMT after touching its highest in more than seven months on Wednesday at $9,550.
US Comex copper futures shed 0.3% to $4.22 per lb.
“It has been a very strong picture across most metals, largely due to China reopening trade, but it will be a bumpy road,” said WisdomTree commodity strategist Nitesh Shah.
China’s lifting of COVID-19 controls spurred optimism about a rebound in metals demand, sending copper on a rally that peaked on Wednesday at 16% over 10 sessions.
Some investors remained bullish longer term, buying 1,450 lots of LME copper call options on Thursday at a strike price of $20,000 a tonne with a September expiry, data showed.
“As we go into the Chinese New Year period, the likelihood is that COVID cases will accelerate, and that could weigh on metals demand in the short term,” Shah said.
Chinese markets will be closed next week to celebrate the Lunar New Year, a traditionally weak period for metals consumption.
It is also a time when millions are travelling for long-awaited reunions with family, which could lead to fresh coronavirus outbreaks.
The Yangshan copper premium fell to $31.50 a tonne on Wednesday for its lowest since April 2022, indicating weakening demand for imported copper into China.
Weak US retail sales data on Wednesday refuelled fears of a recession triggered by rising interest rates to fight inflation.
One of the biggest losers on the LME was aluminium, which dropped 1.7% to $2,592 a tonne.
Shah pointed to a potential increase in supply of the energy-intensive metal because some smelters that closed in the face of soaring power prices might soon resume output.
European gas prices have slid by half over the past month and are down 81% from their September peak.
LME lead slipped 2% to $2,140.50 a tonne and tin fell 1.2% to $28,740 while zinc added 0.7% to $3,428 and nickel jumped 5.8% to $29,450.
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