LONDON: Copper prices retreated on Tuesday on concerns that a deepening debt crisis in China’s property sector will curb demand.

Three-month copper on the London Metal Exchange (LME) slipped 0.9% to $9,556 a tonne by 1700 GMT, reversing direction after a 1.3% gain on Monday.

“China is the big unknown right now. The trade data was on the positive side, but we’ve got this property crisis continuing to spread and expand,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Chinese developer Kaisa told a Chinese government think-tank that the business needs help to pay investors, workers and suppliers after the real estate sector was hit by a liquidity squeeze.

The real estate sector accounts for a large share of copper consumption and China is the world’s biggest user of the metal.

Energy shortages in China and electricity price increases in Europe also threatened to dent demand from metal users.

The US Federal Reserve warned on Monday of the potential for a drop in investor risk appetite.

Copper’s downside was limited, however, as continued inventory declines raised the prospect of shortages.

Nickel prices in 2022 are expected to fall from this year’s multi-year highs, Chinese research house Antaike said on Tuesday, with the global market projected to swing into a surplus.

LME copper inventories fell to 109,550 tonnes, their lowest since March and down by more than half over the past two months.

On-warrant LME aluminium stocks - metal not earmarked for delivery - tumbled to the lowest since December 2005 at 599,925 tonnes.

LME aluminium lost 1.7% to $2,562 a tonne, nickel shed 1.2% to $19,410, lead retreated 1% to $2,340.50, but zinc gained 0.3% to $3,281.50 and tin was up 0.2% at $37,405.