METALS-Shanghai metals fall as COVID surge in China unsettles traders

Jan 3 (Reuters)Prices of metals in Shanghai declined on Tuesday as the rapid spread of coronavirus infections and contracting factory activities in top consumer China heightened traders’ concerns of tepid demand.

The most-traded February copper contract on the Shanghai Futures Exchange SCFcv1 was down 0.7% at 65,670 yuan ($9,540.20) a tonne, as of 0319 GMT, aluminium SAFcv1 dropped 2.7% to 18,175 yuan a tonne and zinc SZNcv1 shed 1.8% to 23,290 yuan a tonne.

SHFE nickel SNIcv1 was down 0.8% at 227,500 yuan a tonne, tin SSNcv1 decreased 0.4% to 208,320 yuan a tonne and lead SPBcv1 fell 0.5% to 15,850 yuan a tonne.

China’s official purchasing managers’ index (PMI) showed factory activity shrank for the third straight month in December and at the sharpest pace in nearly three years as COVID-19 infections swept through production lines across the country.

The private Caixin survey, believed to focus on smaller, export-oriented firms compared with the larger official PMI survey, also showed factory activity shrank at a sharper pace in December after Beijing’s abrupt reversal of anti-virus measures.

The industrial metals markets might in the next few months as the headwinds of slow growth will likely dominate the economic landscape for some time.

Nonetheless, the dropping of China’s stringent “zero-COVID” measures still sparked some hopes for better economic activities in the world’s biggest metals consuming market.

Three-month copper on the London Metal Exchange CMCU3 rose 1.3% to $8,478.50 a tonne, reversing two sessions of losses.

LME aluminium CMAL3 increased 0.7% to $2,394 a tonne, tin CMSN3 advanced 2% to $25,300 a tonne, zinc CMZN3 was up 0.5% at $2,986 a tonne, while lead CMPB3 declined 1.5% to $2,258.50 a tonne.

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($1 = 6.8835 yuan)

(Reporting by Mai Nguyen in Hanoi; Editing by Sherry Jacob-Phillips)

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