LONDON: Copper prices slumped on Friday to their weakest in 17 months as inflation data reinforced fears that central bank tightening would push economies into a recession and hit metals demand.
Three-month copper on the London Metal Exchange had eased 3.1% to $7,999 a tonne by 1500 GMT after dropping to its lowest since early February 2021 at $7,955.
“Recession fears are the dominating factor right now, that’s taking casualties right, left and centre. Every time there’s an indication of more hawkish policy, markets fall further,” said Nitesh Shah, commodity strategist at WisdomTree.
Euro zone inflation hit another record high in June, data showed on Friday, which Shah said “looks alarming high, giving more firepower to the ECB”.
Even some bullish news from top metals consumer China failed to lift sentiment. China’s manufacturing activity expanded at its fastest in 13 months in June, buoyed by a strong rebound in output.
“Trying to get China back to full speed when the rest of the world is looking like it will slow down is going to be difficult,” Shah added.
Data on Friday showed activity at factories from the United States to the euro zone slowed to levels last seen during the initial wave of the pandemic.
LME copper was on track for a fourth consecutive weekly decline, having registered its worst quarter since 2011 in the three months ended June, falling 20.4%. It was down 4.3% for the week.
Other industrial metals also fell, with zinc dropping 9% this week and aluminium headed for its sixth straight weekly fall, down 1%.
Also weighing on metals was a firmer dollar index, making commodities priced in the US currency more expensive for buyers using other currencies.
Copper output in Chile, the world’s largest producer of the metal, fell 2.7% year-on-year to 480,275 tonnes in May.
LME aluminium slipped 0.8% to $2,425 a tonne, zinc dropped 4.2% to $3,025, the weakest since October 2021, nickel eased 1.3% to $22,395, lead dipped 0.1% to $1,906.50, but tin added 0.8% to $26,655.