LONDON: Copper prices fell to a two-week low on Tuesday as worries about the damage to demand and economic growth from the Omicron coronavirus variant and monetary policy tightening in the United States weighed on sentiment.
Fed Chair Jerome Powell said the U.S. central bank is likely to discuss speeding up its tapering of large-scale bond purchases, which traders said triggered further selling after the New York open.
Benchmark copper on the London Metal Exchange (LME) was down 1.8% at $9,409 a tonne at 1713 GMT, having touched it’s lowest since Nov. 18 at $9,395.
"While the severity of the new variant remains a big uncertainty, it casts a shadow over demand growth in the near future and further complicates the supply chain," said ING analyst Wenyu Yao.
"For most LME metals, declining stocks continue to provide some support."
Copper edges higher despite warning signs from China
Omicron: Drugmaker Moderna's chief executive set off alarm bells with a warning that existing COVID-19 vaccines would be less effective against the Omicron variant than they have been against the Delta variant.
Demand: China's factory activity unexpectedly picked up in November, growing for the first time in three months as raw material prices fell and power rationing abated.
Inventories: Copper stocks in LME-registered warehouses have been falling since late August and now stand at 76,450 tonnes. Another 10,350 tonnes are due to leave over the coming days.
Worries about copper availability on the LME market have for some weeks created a scramble for nearby delivery and a premium for cash metal over the three-month contract.
Nickel: Stocks of nickel in LME warehouses - - at 114,360 tonnes - are less than half the level in late April. Cancelled warrants - metal earmarked for delivery - at 48% indicate a further 55,098 tonnes are due to leave.
The premium for cash nickel over the three-month contract is near two-year highs at $178 a tonne.
Three-month nickel was down 1.1% at $19,910 a tonne.
Freight: Analysts say problems with shipping metal to consumers is partly behind shortages in some locations, including Europe and the United States.
Other metals: Aluminium slipped 0.5% to $2,617 a tonne, zinc fell 0.2% to $3,190; lead firmed by 0.3% to $2,278 and tin ceded 0.3% to $39,010.
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