LONDON: Copper prices came under pressure on Monday as focus shifted back to weakening demand, particularly in top consumer China, while negative sentiment was reinforced by a firmer dollar.

Benchmark copper on the London Metal Exchange (LME) was down 0.9% at $9,103 a tonne at 1702 GMT. Copper touched $9,257 on Friday for its highest since June 16 and a gain of nearly 25% since the end of September.

Traders said softness in the US currency from the prospect of a less aggressive stance on interest rates by the Federal Reserve had triggered speculative buying of dollar-priced industrial metals since the start of 2023.

“Copper prices are up sharply, but fundamentals still don’t look great. You can see that in the physical market premium,” said Liberum analyst Tom Price.

“Copper consumers and physical traders are probably thinking ‘no, I’m not going to compete with speculators’. They will defer purchases and consumption.”

Physical market premiums are paid above benchmark prices set on exchanges. The widely watched Yangshan copper premium was at $32.50 a tonne on Friday, down about 80% since last October.

Slowing industrial activity in China because of the Lunar New Year holiday next week is also expected to dampen demand. Aluminium, too, hit a six-month high at $2,630 a tonne on Monday as a decisive break above the 200-day moving average helped to create momentum. It was last up 0.5% at $2,607.

Mounting surpluses are expected eventually to bring a halt to the rally that has lifted aluminium prices by more than 15% so far this year.

“Aluminium prices are set to remain under pressure over the coming month as inventories build in the Chinese physical market,” Citi analysts said in a recent note.