Copper prices fall as China’s yuan slumps
Copper prices fell on Friday as investors worried about slowing economic growth and China’s yuan continued to weaken, making dollar-priced metals costlier for buyers in the world’s biggest commodities market.
Benchmark copper CMCU3 on the London Metal Exchange (LME) was down 1.2% at $7,639 a tonne by 0955 GMT, heading for a weekly drop of about 3%.
Prices of the metal used in the power and construction industries have tumbled 30% from a peak in March but have held around $7,500-$8,000 since July.
“Pushing copper down are currency dynamics coming from a stronger dollar and a weaker yuan,” said Gianclaudio Torlizzi, a partner at consultants T-Commodity.
However, he added that tight supply in China would keep prices around current levels.
“China’s economy remains weak and is still not offering any good reason to go long metal. But it is very risky to go short,” he said.
The yuan has fallen by about 4% against the dollar in the past month and on Friday slipped past the psychologically important level of 7 yuan to the dollar for the first time in two years.
Pushing it lower are expectations of rapid U.S. interest rate increases, which have sent to dollar to 20-year highs against major currencies, and concerns over China’s economic outlook. USD=FRX/
China’s economy was more resilient than expected in August and factory output grew faster than predicted, but a deepening property slump is making forecasters nervous.
The broader global economy, meanwhile, could be edging towards recession, the World Bank said.
Global stock markets also fell on Friday.
Visible copper inventories in China are very low, but Yangshan copper import premiums have fallen to $93 a tonne from $112.50 last month, suggesting weaker demand for overseas metal. SMM-CUYP-CN, CU-STX-SGH, SMM-CUR-BON
All except nickel were heading for weekly falls.
Source: Reuters (Reporting by Peter Hobson Additional reporting by Siyi Liu and Dominique Patton Editing by David Goodman)