Copper Prices Are Slightly Lower in Asia-Pacific Trade but Last Week’s Profit Remains.

Copper prices traded lower on Monday as the reality of China’s “Zero-Covid” policy weighed on the industrial metal’s outlook.

On Friday, copper added 7.5% to its highest level since late August as reports of a policy shift in China caused an increase of buying over risk assets. While Covid cases increase across the country, developments are pointing to an eventual reopening, such as German expatriates being allowed access to the BioNTech vaccine.

However, no mRNA vaccines have been accepted for China’s population, even though the shot is more effective than those currently being administered across the country. China saw over 7k new community cases of Covid on Monday, rising to near the highest levels since April. The current surge is forcing several cities to enact fresh lockdown measures.

The Foxconn plant in Zhengzhou, China, is expected to seriously impact the production of iPhones, according to a statement from Apple.

On the other hand, the labor shortages at the plant have increased, per a worker cited by the Financial Times. The fact that China is tamping down on some of its most lucrative segments of the economy shows strict adherence to its Covid policy, putting a near-term policy shift likely out of the question for now. Any indication of such a move remains an upside risk for prices.

Furthermore, the Federal Reserve and other central banks are at or close to hawkish peak, according to market-based measures like overnight index swaps.

That bodes well for industrial metals, although recession remains imminent. Given that global inventory levels remain low and prices are well off their yearly highs, copper prices are likely primed for a big move higher. It just needs a few key elements to take regularize.