Copper prices retreated on Tuesday, weighed down by a firmer dollar and worries that a power crisis and slower economic growth in top metals consumer China will erode demand.

Three-month copper on the London Metal Exchange CMCU3 had eased 0.9% to $9,783 a tonne by 0950 GMT after rising by 1.7% on Monday.

High power prices and efforts to curb emissions in China have dampened output of some metals, but analysts are concerned that fabricators will also be hit, undermining consumption.

“There are a lot of uncertainties around, including how severe the demand destruction will be from the power crunch both in China and elsewhere in the world,” said Wenyu Yao, a senior commodities strategist ING Bank.

“So, in the short term the market will remain very volatile until things become clearer.”

The dollar index .DXY ticked higher, making commodities priced in the U.S. currency more expensive to buyers using other currencies.

Low inventories have supported copper prices, which hit a five-month peak of $10,452.50 a week ago, but Chinese research house Antaike said more material may soon become available.

“The congestion of global shipping routes has been alleviated to some extent. In-transit stocks, commercial stocks and other hidden stocks may become dominant,” it said in a note.

* On-warrant copper stockpiles in LME warehouses MCUSTX-TOTAL rose for the fifth straight session to 27,100 tonnes, rebounding slightly from a 1998-low of 14,150 tonnes hit on Oct. 14. They are still down, however, 84% over the past two months.

* The premium of LME cash nickel over the three-month contract CMNI0-3 shot up to $189 a tonne, a level unseen since October 2019, indicating tightness in nearby supplies, following Eramet’s ERMT.PA report of a drop in ferronickel output in New Caledonia.

Three-month nickel CMNI3 was the only LME metal in positive territory, rising 0.2% to $20,355 a tonne.

* LME aluminium CMAL3 fell 0.8% to $2,853 a tonne, zinc CMZN3 declined 1.6% to $3,403, lead CMPB3 dropped 0.4% to $2,430 and tin CMSN3 shed 0.4% to $37,305.
Source: Reuters (Reporting by Eric Onstad; Additional reporting by Mai Nguyen in Hanoi; Editing by Subhranshu Sahu)