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METALS-Copper dips as weak Chinese data adds to slack demand

Reuters · 11/16/2022 06:35
METALS-Copper dips as weak Chinese data adds to slack demand

Updates throughout, moves dateline from BEIJING

- Copper prices fell on Wednesday as weak Chinese economic data added to signs of low demand and ample supply, taking the heat out of a recent rally.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was down 0.7% at $8,319 a tonne at 1120 GMT.

Prices had surged to a five-month high of $8,600 on Monday -- up 15% since the start of November -- on hopes that China would abandon its zero-COVID policy and U.S. interest rate rises would slow, lifting economic growth and metals demand.

But home prices in China fell at their fastest pace in over seven years in October, according to data on Wednesday that underscored deepening contraction in the construction sector and followed weak manufacturing data on Tuesday.

China is by far the biggest metals consumer and COVID-19 cases are rising there, raising fears of wider lockdowns that would hamper economic activity.

China's yuan meanwhile weakened against the dollar, making dollar-priced metals costlier for local buyers. CNY=CFXS

Chinese copper import premiums have tumbled to $102.50 a tonne from $144.50 last week, suggesting lower demand for overseas metal.

Supply also suddenly looks ample on the LME, where quickly delivered cash copper has flipped from a premium of more than $100 versus the metal for delivery in three months to a discount of almost $30. CMCU0-3

Copper is stuck between bears, who see a slack market, and bulls looking ahead to stronger demand as China lifts its COVID controls, said Gianclaudio Torlizzi, a partner at consultants T-Commodity.

"We to wait for some weeks before the market takes a clear direction," he said. "In my view that direction will be higher."

LME aluminium CMAL3 was down 0.7% at $2,418 a tonne, zinc CMZN3 slipped 0.8% to $3,086, CMNI3 fell 4.5% to $28,800 and lead CMPB3 was down 0.8% at $2,201.

Tin CMSN3 was the lone riser, up 4.2% at $24,375 a tonne.

(Reporting by Peter Hobson
Additional reporting by Siyi Liu and Dominique Patton; Editing by Kirsten Donovan)


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