LONDON: Copper prices edged lower on Thursday as an accelerating wave of coronavirus infections in China, the biggest consumer, eroded demand and solid US economic data suggested that interest rates may remain higher for longer, stifling growth.

Benchmark copper on the London Metal Exchange (LME) was down 1% at $8,306.60 a tonne at 1700 GMT. Prices rose sharply in November as China began dismantling its economically damaging zero-COVID policy and markets began to anticipate the end of US interest rate rises.

But stronger than expected US employment and GDP data heralded higher rates, pushing down US stock markets and boosting the dollar.

And while China’s loosening may boost demand in the longer term, it has allowed the virus to sweep through the country, disrupting business.

A Shanghai hospital told its staff to prepare for a “tragic battle” as half of the city’s 25 million people will likely get infected by the end of next week. “The relaxation of China’s zero-COVID-19 restrictions has lifted the market mood much more than it will lift demand,” said Julius Baer analyst Carsten Menke.

Measures to support China’s slumped property market are unlikely to lead to rapid recovery and growth in other countries will not be strong enough to compensate for China’s weakness, he said.

“2023 will be another cyclically challenging year for copper and industrial metals more broadly ... That said, the structural outlook remains bright, as copper is set to join the energy-transition-driven battery-metals super cycle. Short-term setbacks should be seen as longer-term buying opportunities.”