Copper prices fell on Monday, as new COVID-19 restrictions in top consumer China and fears of rapid interest rate hikes leading to a global economic slowdown dent demand for metals.
Three-month copper on the London Metal Exchange CMCU3 dropped 2.5% to $7,614.50 a tonne by 0544 GMT.
Copper, used in power and construction and often seen as a gauge for the global economic health, hit its lowest level since November 2020 last week.
The most-traded August copper contract on the Shanghai Futures Exchange SCFcv1 was down 2.8% at 58,020 yuan ($8,652.99) a tonne.
“The declines can be attributed to fears of new restrictions in Shanghai and Macau that could dampen growth. We are caught in the negative feedback look of Fed rate hikes and COVID risks in China,” said Stephen Innes, managing partner at SPI Asset Management.
“Market risks have shifted decisively from inflation to growth as ‘hard’ economic data has slowed considerably. Some investors are also taking profit ahead of key data later this week.”
Multiple Chinese cities are adopting fresh COVID-19 curbs, from business halts to lockdowns, to rein in new infections, with the commercial hub of Shanghai bracing for another mass testing campaign after detecting the BA.5 Omicron subvariant.
Market participants are awaiting data from China due on Friday that could offer more clarity on metals demand and health of the world’s second-largest economy.
FED: Strong U.S. payroll data on Friday gave the Federal Reserve ammunition to deliver another 75 basis point interest rate increase later this month.
DOLLAR: The dollar was on the front foot at the start of a week, making greenback-denominated metals more expensive for other currency holders.
POLL: China’s export growth likely slowed in June due to softening global demand, while lingering COVID curbs weighed on domestic demand and imports, a Reuters poll showed.
PERU: Copper output at Peru’s huge Las Bambas mine has returned to normal levels after a two-month shutdown.
OTHER METALS: LME aluminiumCMAL3fell 1.3% to $2,404 a tonne, zincCMZN3dipped 1.2% to $3,061, leadCMPB3eased 0.1% to $1,916, and tinCMSN3added 0.3% to $25,430 .
Shanghai aluminiumSAFcv1lost 2.2%, zincSZNcv1eased 0.2%, nickelSNIcv1fell 0.1%, leadSPBcv1dipped 1.1%, and tinSSNcv1was down 0.3%.
($1 = 6.7052 Chinese yuan renminbi)
