Copper price retreats after hitting 5-month high

Spence copper mine in the North of Chile. (Credit: Consejo Minero)

The copper price fell Monday afternoon after hitting near five-month highs on optimism about demand in China.

Copper for delivery in December fell 2% on the Comex market in New York, touching $3.83 per pound ($8,426 per tonne), from an earlier $3,90 per pound.

[Click here for an interactive chart of copper prices]

China’s easing of covid-19 restrictions included shortening quarantines by two days for close contact of infected people and for inbound travelers. Still, a complete dismantling of covid controls may be a long way off.

“Relaxed protocols for covid prevention helped start the rally last week,” said Giles Coghlan, analyst at broker HYCM.

“The announcement of the 16 point property support plan is further good news supporting a return to demand for copper and underpinning prices.”

A notice to financial institutions from Chinese regulators outlined steps to support the industry, including loan repayment extensions, in a major push to ease the deep liquidity crunch which has plagued the property sector since mid-2020.

Meanwhile, receding worries about copper supply on the LME market due to rising stocks weighed on prices, while the premium for the cash over the three-month contract has retreated to near zero from $135 a tonne only three weeks ago.

(With files from Reuters)