Poor demand prospects weigh on London copper

LONDON — Copper prices slipped on Monday as the market focused on poor demand prospects, particularly in top consumer China, while outflows from London Metal Exchange (LME) warehouses and a softer dollar provided support.

Benchmark copper on the LME was little changed at $8,349 a metric ton at 1707 GMT. Traders said activity was subdued and likely to remain so until after the Chinese Lunar New Year holiday in February.

China’s troubled property sector and a slowdown in manufacturing around the world have hit prices of copper and other industrial metals over the past year.

“China’s property market has weakened at a rate we haven’t seen in decades. Globally we are in one of the longer manufacturing downturns in more than 40 years,” said Jay Tatum, portfolio manager at Valent Asset Management.

A weaker US currency makes dollar-priced commodities cheaper for holders of other currencies, which could boost demand.

Traders said moves by China’s state-owned banks to support the yuan by selling the dollar was a plus for base metals, which can be highly correlated with the Chinese currency.

Stock of copper in LME-approved warehouses has dropped 18% to 156,750 tons since the middle of last October. Cancelled warrants — metal earmarked for delivery — at 21% of the total, compared with 12% on Jan. 11, suggest that more copper will leave the LME system.

Elsewhere, aluminum fell to $2,153 a ton in official rings, its lowest since Dec. 14, as traders priced in expectations of surpluses, partly because of record production in China despite weather-related curbs in the country’s southwest. It was last down 0.3% at $2,160.

In other metals, zinc lost 0.1% to $2,460 a ton; lead advanced 1% to $2,126; tin gained 1.3% to $25,635; and nickel was down 0.4% at $15,965. —