Copper, zinc and nickel prices rebounded from Friday's Omicron-triggered sell-off on renewed concerns about global inventories.
A new report from Capital Economics reiterates the recent view that metals prices will weaken significantly in 2022 as Chinese demand slows. But the report said it was too early to tell whether the new strain would add further stress.
And while a series of new government restrictions related to the virus will dampen demand, Capital Economics notes that supply is also likely to be disrupted and any negative impact on prices is "likely to moderate", especially with inventories at historic lows.
Copper prices rose, recouping some of last week's losses from the discovery of a newly mutated virus, as markets tried to weigh its severity and possible impact on economic recovery.
Inventories at LME-registered warehouses fell to just over 80,000 tonnes, about a third of the level at the end of August. The cancellation of warehouse receipts showed that another 15,350 tonnes were being shipped overseas.
