LONDON: Copper extended its losses on Monday as the dollar gained strength on growing anxiety about future US trade policy under President-elect Donald Trump and demand prospects from top consumer China remained weak.
The most-traded three-month copper contract on the London Metal Exchange (LME) was down 1.2% to $9,338 per metric ton at 1600 GMT.
Copper losses widened as the dollar index rose 0.5% to its highest level since early July to make greenback-priced metals more costly for holders of foreign currencies.
The dollar rally continued on the prospect that Trump’s proposed tariff and tax policies could keep US interest rates high and hurt trading partners including China, which is already struggling to revive its economy.
China has been tackling hidden debt and boosting stimulus measures, but those efforts have not fed through into more bullish sentiment.
Sluggish corporate borrowing in China is the latest bearish signal about metals consumption, said Dan Smith, head of research at Amalgamated Metal Trading.
The market “was choppy after the US election last week and is now consolidating on fundamentals. US policy may drive the investment sentiment, but the Chinese one drives demand.” Smith added.
Chinese banks extended 500 billion yuan ($69.51 billion) in new yuan loans last month, greatly lagging the forecast for 700 billion yuan.
Total social financing, data which is closely watched by metals analysts as a key gauge of metals demand, also slowed to a record low of 7.8%.
The copper premium, a fee on top of the LME price for Chinese importers, is a demand indicator.
Among other metals, aluminium prices dropped 1.3% to 2,586 per metric ton. Prices of the light metal soared to five-month highs last week on supply disruptions of bauxite and alumina, the raw materials to make primary aluminium.
The most traded alumina contract on the Shanghai Futures Exchange(ShFE) for January expiry set fresh record highs on Monday. Zinc dropped 0.1% to $2,976, nickel decreased 1.8% to $16,095, lead dropped 0.3% to $2,018.5 and tin dipped 1% to $31,345.