Copper retreats from two-week top on concerns over China demand

• Copper prices pare daily gains amid fresh challenges to demand.
• China’s covid conditions join fears of global economic slowdown to probe bulls.
• Quad Summit, US data and FOMC Minutes to direct short-term moves.

Copper prices on COMEX ease from a 12-day high as market sentiment dwindles amid mixed clues during early Monday. That said, the Copper futures on COMEX retreat to $4.30 heading into the European session, following the initial run-up to refresh a multi-day high around $4.33.

Reuters detailed copper price moves on LME and SFE as, “Benchmark three-month copper on the London Metal Exchange (LME) was up 0.5% at $9,471 a tonne, as of 0418 GMT,” whereas, “The most-active June copper contract on the Shanghai Futures Exchange rose 0.3% to 71,950 yuan ($10,758.06) a tonne by noon break.”

It’s worth noting that the hopes of further support measures from China to overcome covid-led economic slowdown, as well as battle inflation woes, keep the copper buyers hopeful. On the same line is the overall reduction in Mainland China’s new daily covid cases, eased to 869 from 898 prior at the latest.

However, a jump in Beijing’s virus numbers and Shanghai’s activity restrictions seem to probe the red metal off late. Beijing reports the record of new covid cases on Monday, which in turn renewed expectations of fresh lockdowns and weigh on the market sentiment. ''The city reported 99 cases for Sunday, up from 61 on Saturday,'' said Bloomberg. During the weekend, Reuters reported that Shanghai's central Jingan district, a key commercial area of the Chinese financial hub, will require all supermarkets and shops to shut and residents to stay home until at least Tuesday.

Elsewhere, repeated Fedspeak and a lack of major data/events renewed optimism earlier but inflation fears join geopolitical concerns surrounding the Russia-Ukraine crisis to weigh on the market sentiment, as well as commodity prices.

Moving on, Quad Summit will act as an immediate catalyst as US President Joe Biden will meet the national leaders of Australia, Japan and India, signaling hopes of pushing China towards more liberal conditions of trade and politics. Following that, the US core PCE price index for April, the Fed’s preferred inflation gauge, joins the second reading of the US Q1 2022 GDP and preliminary PMIs for May to entertain copper traders.

Technical analysis

Despite the recent pullback, COMEX copper prices hold onto the previous day’s upside break of a one-month-old descending trend line, around $4.25, which in turn keeps the buyers hopeful.