Copper plunges as China’s COVID-19 worries persist

By Onome Amuge

Copper prices traded in bearish territory due to ongoing worries that a global recession and rising COVID-19 cases in China would depress economic growth and demand for metals.

Three-month copper on the London Metal Exchange (LME) was down 0.3 per cent to $8,272 a tonne , after touching its highest in more than five months at $8,600 per tonne,

but has declined 3.4 per cent so far this week.

The most-traded January copper contract on the Shanghai Futures Exchange lost 1.14 per cent to 65,260 yuan or $9,370.24 a tonne.

According to reports, China, the top market for metals,set out urgent plans to protect rural communities from COVID-19 as millions of city-dwellers planned holidays for the first time in years.

Edward Gardner, commodities economist at Capital Economics,London, noted that China’s COVID problems are still a headwind for industrial metals prices.

 “Although we’ve seen restrictions ease, our China economics team is making the point that the near-term outlook for China’s activity is pretty bleak,” Gardner said.

Natalie Scott-Gray, financial analyst at StoneX noted that while China has introduced some policies to bolster the property industry,  efforts to boost domestic growth will not be felt in the near-term.

“We think the value of industrial metals is still a bit overdone and we see prices falling over the next couple of months,” Gardner said. He added that the trough for copper is forecast at $7,000 in the second quarter of 2023.

Among other metals, LME aluminium  was up 1.1 per cent to $2,411 a tonne, nickel gained 1 per cent to $28,595 a tonne, lead rose 0.5 per cent to $2,163 a tonne, zinc slipped 2.1 per cent to $3,092.50 a tonne,and tin shed 0.7 per cent to $23,435 a tonne.