LONDON: Copper prices fell to one-week lows on Tuesday after Moody’s cut its outlook on China’s credit ratings to negative from stable, inventories in London Metal Exchange warehouses rose and the dollar firmed.

Benchmark copper was 1.1% lower at $8,348 a metric ton in open outcry trading, the lowest since Nov. 28.

Moody’s cited mounting global concern over the impact of surging local Chinese government debt and a deepening property crisis in the world’s second-largest economy.

“A slump in China’s property market has been a major headwind to copper demand this year and a continued slowdown in the sector remains the main downside risk for the metal,” said Ewa Manthey, ING’s commodities strategist.

“We believe that until the market sees signs of a sustainable recovery and economic growth in China, we will struggle to see a long-term move higher for copper prices,” she added.

Copper slides as dollar strengthens and China doubts return

Chinese equities tumbled to levels last seen in 2019 after the rating cut, while major banks in China were seen rushing to buy the yuan against the dollar.

The stronger U.S. currency, making dollar-priced metals more expensive for holders of other currencies, reinforced negative sentiment for demand and prices.

Also spurring a negative reaction was higher stocks of copper in LME registered warehouses, which at 180,550 tons have climbed 230% since the middle of July.

Elsewhere, nickel prices resumed their downtrend due to expectations of excess supply. LME nickel lost 2.2% to $16,340 a ton as top producer Nornickel saw a bigger surplus this year, citing lower consumption from the battery sector.

Aluminium edged down 0.9% to $2,162 a ton, zinc dropped 1% to $2,073, and tin shed 0.6% to $23,925.

LME lead fell 1% to $2,073 a ton, on track for its 12th straight session of loss.