Base metals slid as coronavirus outbreaks in China threatened to curtail the country’s economic output, hitting demand in the world’s top consumer of raw materials.

Aluminum led declines on the London Metal Exchange, falling as much as 3% after dropping on Monday. Nickel trading on the LME will resume on Wednesday, over a week after being suspended amid a historic short squeeze.

Cities and regions across China are imposing activity curbs, with the country reporting more than 5,000 new Covid-19 infections for the first time since the early days of the pandemic.

Morgan Stanley slashed its forecast for China’s economic growth this quarter to zero, as Shanghai locked down construction sites. Long-lasting curbs on movement and manufacturing would present a severe headwind to metals demand due to China’s high proportion of global consumption.

The cooling of metal markets contrasts with the sharp moves higher earlier this month, when both copper and aluminum touched new records. Traders were concerned about disruption to supplies from Russia due to sanctions imposed after its invasion Ukraine. Low exchange stockpiles have exacerbated those fears.

Base metals “have generally been hurt by a double whammy of China lockdown and the general deflation of the war premium,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “All helping to offset lingering supply worries from Russia.”

The European Union excluded aluminum, copper and nickel from its latest set of trade restrictions on Russia. The sanctions mostly targeted imports of finished steel products.

Aluminum fell 1.8% to 3,261.50 a ton on the LME by 10:05 a.m. local time. Copper fell 0.7%.

Xiang Guangda, whose large short position roiled the nickel market last week, has secured a deal with his banks to avoid further margin calls, reducing the risk that the squeeze is repeated when trading restarts on the LME.

Benchmark iron ore prices in Singapore declined for a sixth day.