Base metal prices in London slid on Wednesday, as a two-year-high inflation rate in China dented market sentiment, while investors braced for further aggressive U.S. interest rate hikes ahead of a widely anticipated inflation data.
Three-month copper on the London Metal Exchange CMCU3 lost 0.9% to $7,909.50 a tonne by 0615 GMT.
Consumer price index (CPI) in China, the world’s top metals consumer, last month rose 2.7% year-on-year, the fastest pace since July 2020 and higher than the 2.5% gain in June, but lower than the 2.9% expected by economists.
The factory-gate inflation, however, eased to its weakest since February 2021, as raw material prices fell due to already slower construction activity.
The producer price index (PPI) rose 4.2% year-on-year, after a 6.1% uptick in June.
“Despite the inflation numbers falling within expectation, sentiment still weakened as a likely tighter monetary policy would hurt demand of copper and other metals,” a trader said.
The U.S. CPI, due at 1230 GMT, is likely to show that prices rose at an 8.7% annual pace during July, according to the median estimate of economists polled by Reuters, which would be a small downward correction from June’s whopping 9.1%. USCPNY=ECI
Even if the data comes in softer than expected, the U.S. Federal Reserve is expected to continue to hike rates in its September meeting to rein in inflation.
The most-traded September copper contract on the Shanghai Futures Exchange SCFcv1 dipped 0.4% to 60,970 yuan ($9,022.97) a tonne.
LME zinc CMZN3 fell 0.7% to $3,511 a tonne, lead CMPB3 lost 0.2% to $2,161.50 a tonne, tin CMSN3 declined 0.9% to $24,200 a tonne.
ShFE zinc SZNcv1 rose 2.4% to 24,800 yuan a tonne, aluminium SAFcv1 was up 1.1% at 18,690 yuan a tonne, while nickel SNIcv1 dropped 1% to 166,030 yuan.
