Industrial metals slip on China Covid surge; aluminium prices shed 2.1%

Industrial metals faltered on Tuesday as rising cases of the Omicron variant of Covid-19 dampened the economic outlook for top metals consumer China, but supply concerns underpinned prices.

Benchmark prices for aluminium shed 2.1 per cent to $3,252 per tonne in official trading activity, after sinking 4.7 per cent in the previous session. Three-month copper was down 0.8 per cent to $9,860 per tonne.

China's economy perked up in the first two months of 2022, with key indicators exc­eeding analysts' expectations, however, a surge in Omicron cases, property weakness and heightened global uncertai­nties weighed on the outlook.

"There is a bit of a risk off sentiment in metals for the time being," said Giancluadio Torlizzi, Managing Director at T-Commodity.

"We remain in bullish conditions for base metals, condition of supply remains tight," he added, saying the declines in price would be well-supported by buyers looking for a bargain.

Concerns that Russia's invasion of Ukraine would interrupt metal flows and raise the cost of gas has boosted metals prices, especially of aluminium and zinc, which are energy-intensive.

Russia produces about 6 per cent of the world's aluminium, 7 per cent of global nickel and accounts for about 3.5 per cent of copper supplies.

Nickel trading: The LME will resume trading of nickel contracts at 8 am London time on Wednesday March 16, after trading was halted a week ago following an unp­recedented surge in prices.

Aluminium supply: China’s daily aluminium output in January and February rose to its highest since mid-2021 despite pollution curbs in the heating season and during the Winter Olympics, as smelter hubs located away from the capital Beijing maintained operations.