METALS-Copper falls as traders gauge hopes of China demand improvement

Credit: REUTERS/MORITZ HAGER

Updates prices, adds quotes

Jan 30 (Reuters) - Copper prices fell on Monday, as weak physical consumption prompted reassessment of how quickly and strongly demand would rebound in top consumer China following its COVID-19 restrictions removal last month.

The most-traded March copper contract on the Shanghai Futures Exchange SCFcv1 fell 1.2% to 69,320 yuan ($10,262.79) a tonne by 0619 GMT as trading resumed after a week-long Lunar New Year holiday, while three-month copper on the London Metal Exchange CMCU3 dipped 0.7% to $9,197 a tonne.

Copper prices since mid-July 2022 have risen 28% in London and 33% in Shanghai, underpinned by hopes of demand recovery in China post dismantling of the "zero-COVID" policy.

However, physical copper demand remained tepid, as shown by falling premiums SMM-CUYP-CN. On Friday, LME copper posted its first weekly fall since mid-December.

China's factory activity in January is expected to have contracted more slowly than in December, a Reuters poll showed, with production hampered as workers continued to fall sick after the government relaxed rules.

"Copper prices have risen to a relatively high level, and the reality may be difficult to make a positive response in the short term," Jinrui Futures said in a note.

"It is expected that copper prices may face a certain risk of a correction after the (New Year) festival."

However, a weaker dollar and supply threats in Peru where MMG Ltd's 1208.HK Las Bambas mine would likely have to halt production from Feb. 1 due to a shortage of "critical supplies", provided some support to copper prices.

LME aluminium CMAL3 fell 0.9% to $2,602.50 a tonne and tin CMSN3 dropped 3.5% to $29,750 a tonne, and lead CMPB3 declined 0.4% to $2,175 a tonne.

SHFE nickel SNIcv1 rose 2.7% to 220,100 yuan a tonne and tin SSNcv1 jumped 2% to 236,650 yuan a tonne, while aluminium SAFcv1 fell 0.7% to 18,975 yuan a tonne and zinc SZNcv1 shed 1.9% to 24,130 yuan a tonne.

LME cash zinc was at a $25.25 per-tonne premium over the three-month contract CMZN0-3, the highest in more than three weeks, as inventories fell to 17,675 tonnes, the lowest since at least 1998, based on Refinitiv Eikon data. MZNSTX-TOTAL

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($1 = 6.7545 yuan)

(Reporting by Mai Nguyen in Hanoi; Editing by Subhranshu Sahu and Rashmi Aich)

((mai.nguyen@thomsonreuters.com; Reuters Messaging: mai.nguyen.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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