Copper prices softened on Monday as the dollar strengthened and the market focused on rising inventories and a weak demand outlook amid lower trading volumes over the holidays.
Traders said volume could be low and volatile this week as expiring contracts are settled and rolled over on the London Metal Exchange on Wednesday due to the Chinese New Year holiday and U.S. holidays.
LME benchmark copper prices were down 0.1% at $12,870 per tonne at 1054 GMT. It has fallen more than 10% since hitting a record high of $14,527.50 per tonne two weeks ago.
“Liquidity remains patchy with many Asian desks on standby, with most participants likely content to wait for clearer direction from US rates and a potential Chinese demand pulse in post-March holiday trading,” Britannia Global Markets said in a note.
A rise in the U.S. currency could make dollar-priced metals more expensive for holders of other currencies, potentially suppressing demand and causing prices to fall.
Copper stocks in LME-certified warehouses are 211,850 tonnes, an increase of more than 50% since January 9th.
Abundant stocks have created a discount on the LME’s three-month forward spot contract. It closed at $106 per tonne on Friday, the highest price in a year.
In warehouses monitored by the Shanghai Futures Exchange, copper stocks of 272,475 tonnes have risen 180% since Dec. 19.
Elsewhere zinc prices fell 0.9% to $3,308 per tonne. It has fallen 8% since hitting $3,575.50 on January 29, its highest since August 2022.
Zinc is also under pressure from increased inventory in ShFE warehouses, with stocks up 33% since January 30 to 87,025.
“Ex-China market tightness that had supported prices has now dissipated, as China turned into a net zinc exporter in November-December, improving concentrate availability and increasing ex-China refined zinc production,” Goldman Sachs analysts said in a note.
Among other metals, aluminum rose 0.1% to $3,080 a tonne, lead fell 0.3% to $1,954, tin fell 0.7% to $46,380, and nickel rose 0.1% to $17,005.
(Reporting by Pratima Desai; Editing by Ronojoy Mazumdar)
