Copper futures are joining the decline in the broader financial markets. Copper prices had come off a weekly rally of about 3%, but they entered the holiday-shortened trading week in the red amid renewed coronavirus fears and lockdown restrictions. How will investors trade the industrial metal heading into 2021?

March copper futures tumbled $0.051, or 1.4%, to $3.5815 per pound at 19:39 GMT on Monday on the New York Mercantile Exchange. The red metal is up nearly 28% year-to-date, enjoying prices unseen in seven years.

After a huge surge 17% surge since September, why is copper hitting the pause button on its rally?

Over the weekend, the United Kingdom went into an emergency lockdown over the rapid spread of a new coronavirus strain. The British government reported that about half of the new cases being confirmed are attributed to the mutation of COVID-19, warning that it spreads 70% faster.

Several other nations have reported this new strain, including Australia and Denmark.

As a result, more than 30 countries imposed border and travel restrictions on the UK. It is unclear if the new strain will make the various coronavirus vaccines ineffective. But the mutation had been discovered in September, so the medical community was not entirely blindsided by the news.

The news is creating consternation that this would throw a wrench in the global economic recovery, which would also impact demand for the industrial metal, as well as other commodities.

Plus, the developments in the UK offset the US government’s much-anticipated $908 billion coronavirus stimulus and relief package.

On the industry data front, copper stocks in warehouses registered by the London Metal Exchange, the Shanghai Futures Exchange, and the US COMEX, are declining. Here is what the inventories look like:

• LME: 127,725 tons, a three-month low.
• ShFE: 82,092 tons, a six-year low.
• COMEX: 87,084, a six-month low.

This shows how much copper is being consumed, prompting speculators to raise their net long positions in copper by 41%, a three-year high.

In other metal markets, January gold futures fell $7.50, or 0.3971%, to $1,881.40 per ounce. March silver futures rallied $0.337, or 1.29%, to $26.37 per ounce. January platinum futures dropped $29.30, or 2.81%, to $1,013.80 an ounce. January palladium futures cratered $54.00, or 2.28%, to $2,318.00 per ounce.