Copper slides to lowest since March 2021 on firm dollar, slowdown fears
London copper prices tumbled on Wednesday to their lowest level since March 2021, dragged down by a robust U.S. dollar and weaker financial markets as fears over a global economic slowdown dented investor sentiment.
Three-month copper on the London Metal Exchange slipped 3% to $8,725.50 a tonne by 0718 GMT, after falling to its lowest since March 5, 2021 at $8,691.
The most-traded July copper contract in Shanghai ended daytime trading 1.6% lower to 67,060 yuan ($9,971.60) a tonne.
Caught in copper’s slipstream, LME aluminium fell 2% to $2,483.50 a tonne, zinc slipped 1.3% to $3,544, lead dipped 1% to $2,044.50, nickel lost 3.6% to $25,020, and tin dropped 3.8% to $30,140.
“Base metals remain pressured by a challenging demand outlook related to China COVID-19 lockdowns and to monetary policy tightening raising recession fears over the trade-off between inflation and growth,” Standard Chartered wrote in a note.
“We expect the base metals complex to continue to take its cues from macro developments, USD moves, external market moves and risk appetite trends.”
Asian stocks slipped in volatile trade, failing to extend Wall Street’s rally as persistent worries about interest rates and inflation remained a key focus for investors.
The dollar index jumped 0.5% against its rivals, making greenback-priced commodities more expensive for buyers using other currencies.
INTEREST RATES: Aggressive rate hikes by major central banks to combat soaring inflation have raised prospects of an economic slowdown.
POLL: The U.S. Federal Reserve will deliver another 75-basis-point rate hike in July, followed by a half-percentage-point rise in September, according to economists polled by Reuters.
ICSG: The world refined copper market showed 3,000-tonne surplus in April, compared with a 22,000-tonne deficit in March, the International Copper Study Group said in its latest monthly bulletin on Tuesday.
COVID: China reported 126 new coronavirus cases for June 21. China’s strict “zero-COVID” policy to prevent the spread of the coronavirus has battered the country’s economy and manufacturing sector.
TIN: Major tin exporter Indonesia is planning to raise the level of a royalty tariff imposed on the production of tin and bring in a progressive structure tied to international prices.
PRICES: Shanghai aluminium lost 1.5%, zinc was up 0.1%, nickel slipped 5%, lead gained 0.2%, and tin fell 5.1%.
Source: Reuters (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)