Base metals fall as demand concerns loom
Prices of base metals fell on Monday despite support from a weakness in the dollar after China’s weak economic data fanned demand concerns.
Three-month copper on the London Metal Exchange CMCU3 was down 1% at $8,588 per metric ton by 0542 GMT, while the most-traded August copper contract on the Shanghai Futures Exchange SCFcv1 slid 0.7% to 68,940 yuan ($9,617.61) per metric ton.
China’s economy grew at a frail pace in the second quarter as demand weakened at home and abroad, with the post-COVID momentum faltering rapidly and raising pressure on policymakers to deliver more stimulus to shore up activity.
Coupling with demand concerns were rising production of industrial metal.
Last month China’s non-ferrous output continued to rise on-year, including aluminium. And the rising supplies against tepid demand raised expectations of inventories pile up in the market.
Copper inventories in SHFE warehouses CU-STX-SGH rose for a third consecutive week last Friday to 82,690 metric tons.
There’s more supply than demand in the spot market, pushing down spot premium in the market and weighing downward pressure on futures prices, said analysts at Meierya Futures.
Refined copper discount dropped to 40 yuan a metric ton last week, a five month low. SMM-CU-PND
Among other metals, LME aluminium CMAL3 dropped 0.9% to $2,255.50 a metric ton, tin CMSN3 dipped 0.2% to $28,500, zinc CMZN3 shed 1.1% to $2,412, lead CMPB3 nudged 0.2% down at $2,119, and nickel CMNI3 fell 1.4% to $21,330.
The U.S. dollar held steady on Monday, after its worst weekly drop of the year. A weaker dollar typically lends some support to the greenback-priced commodity market.
SHFE aluminium SAFcv1 fell 0.8% to 18,225 yuan a metric ton, zinc SZNcv1 slid 1.4% to 20,285 yuan, lead SPBcv1 shed 0.1% to 15,735 yuan, nickel SNIcv1 lost 0.8% to 165,380 yuan, and tin SSNcv1 slipped 0.6% at 231,760 yuan.
Source: Reuters (Reporting by Siyi Liu and Dominique Patton; Editing by Subhranshu Sahu and Nivedita Bhattacharjee)