LONDON: Copper prices slipped on Monday as weak manufacturing data from top consumer China suggested deteriorating demand prospects while Chinese players cut long positions ahead of the Lunar New Year holiday.
China’s manufacturing activity contracted unexpectedly in January, an official factory survey showed, and profits at industrial companies fell for a third consecutive year in 2024.
Negative sentiment has also been reinforced by U.S. President Donald Trump’s threat to impose a 10% punitive duty on Chinese imports on Feb. 1, which would undermine trade and growth.
Benchmark copper on the London Metal Exchange (LME) was down 1.1% at $9,171 a metric ton by 1124 GMT. It touched $9,355.50 a ton on Friday for its highest since Nov. 12.
“China has been reducing risk (selling) ahead of their exit this week … We are in a market that isn’t going to break higher,” said Alastair Munro at broker Marex.
However, significantly lower copper prices could appeal to Chinese buyers, Munro said, adding that they have previously engaged around the $8,800 level.
Copper hits 10-week peak on hopes for Trump deal with China
Elsewhere, the discount for the cash aluminium contract over the three-month forward has narrowed to about $7 a ton, its lowest since last September, driven by concern over stocks on the LME market. The discount was above $40 in December.
Aluminium stocks in LME warehouses have nearly halved to 592,625 tons since last May. Cancelled warrants - metal earmarked for delivery - at 59% suggest more will leave the system over coming days and weeks.
Traders said that many consumers were having to go to the LME for supplies because they had destocked and did not want to hold metal they may not need because financing costs have gone up alongside interest rates.
Three-month aluminium was down 0.6% at $2,623 a ton.
Overall, a softer U.S. currency is expected to offer support for industrial metals priced in dollars.
Zinc was up 0.3% at $2,836 a ton, lead gained 0.5% to $1,949, tin retreated 0.8% to $29,915 and nickel was up 0.6% at $15,765.
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