LONDON: Copper prices on Wednesday fell to their lowest since November 2020 as traders waited for U.S. inflation data that could influence the pace of interest rate rises, economic growth and metals demand.
Copper has tumbled more than 30% from a record high in March as central banks began to raise rates rapidly to quell decades-high inflation, sparking fears of an economic downturn.
Also pressuring metals is weak demand in top consumer China, where COVID-19 lockdowns disrupted manufacturing.
Benchmark copper on the London Metal Exchange (LME) was down 0.6% at $7,313 a tonne at 1027 GMT after slipping as low as $7,202.50.
A higher-than-9% U.S. inflation reading could mean faster U.S. rate rises and higher risk of recession, said Saxo Bank analyst Ole Hansen.
“The market could take it badly,” he said. “Lower than 8% inflation could ease some of the fear and mean the fed would be less aggressive.”
Copper slides on China demand fears and stronger dollar
Rising U.S. interest rates have pushed the dollar to its strongest in two decades, making dollar-priced metals costlier for non-U.S. buyers and potentially dampening demand.
Chinese customs data showed its copper imports rose 15.5% month-on-month in June and overall exports grew at their fastest pace in five months as COVID restrictions eased.
But a trader said Chinese demand remained weak, Yangshan import premiums have fallen to $64 a tonne from $76.50 at the start of July and analysts polled by Reuters downgraded their China growth forecast this year to 4%.
Speculative investors are the most bearish on copper prices on the COMEX exchange since May 2020.
Analysts at Citi said they expected copper to fall to $6,600 within 6-9 months. “We recommend accumulating a short position in base metals,” they said.
Other industrial metals prices were mixed. LME aluminium was up 0.3% at $2,368 a tonne, zinc fell 0.5% to $3,002.50, nickel was unchanged at $21,375, lead rose 0.7% to $1,951.50 and tin was 1.2% higher at $25,870.