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Copper prices came under pressure on Tuesday as demand concerns resurfaced after weak manufacturing data from top consumer China spurred selling, with losses reinforced by a stronger dollar.
Benchmark copper CMCU3 on the London Metal Exchange (LME) was down 0.3% at $8,115 a metric ton at official public outcry after falling to as low as $8,080 a ton.
Copper hit a four-week high of $8,231 on Monday due to recent signs of economic stabilization in China. Copper prices are on course for their third monthly decline.
However, China’s manufacturing sector unexpectedly shrank in October, data showed on Tuesday, underlining the daunting task facing policymakers as they try to revitalise economic growth heading into the end of the year and 2024.
Both new export and import orders contracted for an eighth consecutive month, suggesting that manufacturers were struggling to find buyers overseas and ordering fewer components used in finished goods for re-export.
“The main driver for base metals is still China demand,” said Dan Smith, head of research at Amalgamated Metal Trading, adding that fresh China stimulus announced last week had helped boost metals prices.
China last week approved one trillion yuan ($137 billion) in sovereign bond issuance and passed a bill allowing local governments to front-load part of their 2024 bond quotas to support investment.
“Today’s data show the growth struggle of China. Monetary tools aren’t working and traditional fiscal tools have reached their limits,” said Sandeep Daga, a director at analysis company Metal Intelligence Centre.
Traders said falling stocks of copper in LME-approved warehouses MCUSTX-TOTAL, those monitored by the Shanghai Futures Exchange CU-STX-SGH and in CME-registered warehouses HG-STXTW-STX were helping sentiment.
They are also awaiting a decision on U.S. interest rates from the Federal Reserve on Wednesday which could influence dollar direction. FRX/
A stronger U.S. currency potentially dampens demand for dollar-priced base metals for holders of other currencies.
Aluminium CMAL3 slipped 0.9% to $2,246, zinc CMZN3 fell 1.2% to $2,437, lead CMPB3 dropped 0.7% to $2,106, tin CMSN3 was down 1.3% at $24,700 and nickel CMNI3 retreated 2.4% to $18,055 a ton.