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Copper extends fall to 4th day on economic slowdown worries

Copper prices extended a decline on Tuesday to a 17-month low as a cocktail of factors from aggressive interest rates, a spike in COVID-19 cases in China, potential recession and rising inventories weighed on investor sentiment.

Three-month copper on the London Metal Exchange dropped 1.5% to $7,888 a tonne, as of 0719 GMT, its lowest since February 2021 and down for a fourth straight session.

The most-traded August copper contract in Shanghai ended daytime trading down 1.9% to 60,110 yuan ($8,975.66) a tonne by the midday trade.

“There was a bull trap set early at the open today as S&P and Nasdaq futures pointed higher. However, the rest of the bearish sentiment is just because of recession fear, which is almost certain for most U.S. and Europe already,” a Singapore-based metals trader said.

Pulling down economic activity and inducing recession fears are soaring inflation and interest rate increases in many countries including the United States, where the Federal Reserve is expected to deliver another 75-basis-point increase this month.

Meanwhile, copper stocks in LME-approved warehouses jumped 10,100 tonnes to 136,950 tonnes. They have risen more than 20% over the past week.

COVID: Cities in eastern China tightened COVID curbs on Sunday as coronavirus clusters emerged.

SUPPORT: China will set up a state infrastructure investment fund worth 500 billion yuan ($74.69 billion) to spur infrastructure spending and revive a flagging economy

DATA: China’s services activity grew at the fastest rate in almost a year in June as easing COVID curbs revived demand, while Japan’s service sector activity expanded at the fastest pace in more than eight years.

ALUMINIUM: The premium for aluminium shipments to Japanese buyers for July to September was set at $148 a tonne, down 14% from the previous quarter, to reflect weak demand for automobiles and rising local inventory.

OUTPUT: Chile’s total copper production fell 2.55% in May to 478,800 tonnes, government body Cochilco said on Monday.

OTHER METALS: LME aluminium fell 1.3% to $2,433 a tonne, zinc dipped 1.5% to $3,070, lead slipped 1% to $1,939, nickel was down 0.8% at $22,310, and tin dropped 2% to $26,060.

Shanghai aluminium lost 2.8%, zinc gained 1.8%, nickel rose 0.4%, lead fell 0.8%, and tin fell 1.2%.
Source: Reuters (Reporting by Brijesh Patel in Bengaluru; Editing by Sherry Jacob-Phillips)

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