Copper hit its lowest in over a month as investors sought safety in the dollar due to rising coronavirus cases and lockdowns in large economies, pressuring metals priced in the greenback. Benchmark three-month copper on the London Metal Exchange (LME) fell 0.7 per cent to $7,765 a tonne, its lowest since Dec 23.
The prospects for higher demand from top consumer China and vaccine optimism had pushed copper prices to their highest in nearly eight years earlier this month. But the rally has started to lose momentum as logistical issues dented hopes for a speedy recovery in the global economy.
This latest downturn in copper price reflects the general risk-off sentiment in risky assets such as equities, which is in part motivated by growing concerns about COVID-19 lockdowns in China and Europe. Investors piled into the greenback, making dollar-denominated assets more expensive for holders of other currencies.
Copper stocks in warehouses certified by the LME are at their lowest since September at 76,350 tonnes. Stocks in warehouses registered with the Shanghai Futures Exchange are at their lowest since 2011 while Comex inventories are also slipping.
According to an S&P Global report released last week, industry analysts are predicting the rise in copper prices to continue in 2021 on low inventories and a bullish demand narrative, though at a slower pace.
Mining analysts expect copper prices to average $ 7,716 per tonne in 2021, an approximate 17 per cent increase on a previous estimate of $ 6,614 a tonne. Aluminium slipped 0.9 per cent to $1,974 per tonne, zinc shed 0.5 per cent to $ 2,573 per kg, lead lost 1.4 per cent to $2016 a kg, tin was mostly stable at $22,800 a kg while nickel was down 1.6 per cent to $17,625 a kg.