Copper prices fell to a fresh 20-month low on Wednesday, as an elevated U.S. dollar, renewed COVID-19 restrictions in top consumer China and fears of rapid interest rate hikes stifled demand.
Three-month copper on the London Metal Exchange CMCU3 was down 0.5% at $7,321 a tonne by 0705 GMT, after hitting its lowest since Nov. 23, 2020 at $7,202.50 earlier in the session.
The most-traded August copper contract on the Shanghai Futures Exchange SCFcv1 ended daytime trading down 3.3% at 56,030 yuan ($8,339.91) a tonne, after hitting its lowest since November 2020 earlier in the day.
“The market was gripped by fears of slower economic growth. Expectations of another increase in inflation rose ahead of the release of US Consumer Price Index data,” ANZ commodity strategists said in a note.
“This is driving fears the U.S. Federal Reserve will plough ahead with another 75 basis point rate hike. This was exacerbated by further lockdowns in China.” FEDWATCH
Economists polled by Reuters expect U.S. inflation accelerated to 8.8% on an annual basis, a 40-year peak.
Investors also held back from making large bets ahead of data out of China scheduled for release on Friday to determine the health of the world’s second-largest economy.
DOLLAR: The dollar =USD held close to its highest in nearly two decades against its rivals, making greenback-priced metals more expensive for other currency holders. /
COVID: Multiple Chinese cities are adopting fresh COVID-19 curbs, from business halts to lockdowns, to rein in new infections, while Shanghai residents queued up in sweltering heat for compulsory mass testing for COVID-19 on Tuesday.
DATA: China’s imports of copper rose 15.5 % from month ago to 537,698.1 tonnes in June, data from the General Administration of Customs showed.
GROWTH: The International Monetary Fund on Tuesday again cut its growth forecast for the United States to 2.3% for 2022 from 2.9% in late June.
OTHER METALS: LME aluminium CMAL3 was down 0.5% at $2,349 a tonne, zinc CMZN3 fell 1.5% to $2,970, lead CMPB3 slipped 0.6% to $1,931.50, nickel CMNI3 gained 0.4% to $21,460, and tin CMSN3 added 1.1% to $25,850.
Shanghai aluminium SAFcv1 lost 3.7%, zinc SZNcv1 fell 3.6%, nickel SNIcv1 rose 0.6%, lead SPBcv1 dipped 0.9% and tin SSNcv1 rose 0.9%.
($1 = 6.7183 Chinese yuan renminbi)
