Base metals set for monthly drop as weak China demand weighs

Prices of nonferrous metals rose on Wednesday, supported by a softer dollar, although they were headed for a monthly drop due to weak demand from top consumer China.

Three-month copper on the London Metal Exchange was up 2% at $9,152 per metric ton, as of 0738 GMT, while the most-traded September copper contract on the Shanghai Futures Exchange closed 1.4% higher at 74,470 yuan ($10,303.42) a ton.

The dollar index traded lower on Wednesday, making greenback-priced metals cheaper to holders of other currencies.

LME copper has lost 4.6% so far this month, and on track for its biggest monthly fall since August 2023.

Manufacturing activity in China slipped to a five-month low in July as factories grappled with falling new orders and low prices, pointing to a grinding second half for the world's production powerhouse.

The manufacturing sector consumes a large volume of metals.

Physical demand needs to show up first for the market to know where the floor price is, said Guy Wolf, global head of market analytics at Marex, adding that the price rebound could be swift when Chinese buyers are happy to purchase.

"There's no demand for copper for now, funds are exiting and momentum selling," said a trader, adding that LME prices are likely to fall as low as $8,450 by end-August.

LME aluminium rose 1.7% to $2,261.50 a ton, nickel jumped 2.3% to $16,440, zinc advanced 1.9% to $2,679, lead increased 1% to $2,054.50 and tin climbed 3.4% to $29,750.

LME aluminium and lead were also headed for their biggest monthly losses since June 2022.

SHFE aluminium edged 0.5% higher at 19,135 yuan a ton, nickel jumped 3.5% to 131,840 yuan, zinc advanced 1.2% to 22,840 yuan, lead increased 0.6% to 18,805 yuan and tin was up 2% at 249,320 yuan.