LONDON: Copper prices fell on Monday as investors worried about the pace of economic growth in top consumer China and the yuan fell to its weakest versus the dollar since 2008, making dollar-priced commodities costlier for Chinese buyers.
Data showed China’s economy rebounded faster than anticipated in the third quarter but the outlook is clouded by COVID-19 control measures, a property slump and weakening growth elsewhere in the world.
Meanwhile, Xi Jinping’s newly unveiled leadership team heightened fears that economic growth will be sacrificed for ideology-driven policies.
Chinese stock markets slumped.
Benchmark copper on the London Metal Exchange (LME) was down 0.4% at $7,592.50 a tonne at 1022 GMT.
Copper, which is used in the power and construction industries, has fallen 30% from a peak in March as the global economy slowed, reducing consumption of metals.
Chinese copper demand growth may never achieve former levels, but global supply will nevertheless fail to keep pace with demand during the 2020s, supporting prices, said Julius Baer analyst Carsten Menke.
“It’s a question of when to become bullish on copper, not if,” he said. “If there’s another speculative sell-off, that’s a buying opportunity.”
Analysts at JPMorgan said they still expected prices to fall in the short term. “Copper – which is still trading well above cost support at the moment – looks vulnerable to another leg lower in prices towards $6,500,” they said.
China’s copper imports in September were 25.6% higher than in September 2021, with rising demand from local government infrastructure projects.
Stockpiles in China have also grown, however, with inventories in Shanghai Futures Exchange (ShFE) warehouses rising to 89,566 tonnes from 30,459 tonnes at the end of last month.
LME aluminium was down 0.8% at $2,188.50 a tonne, zinc rose 1.3% to $2,965, nickel was 1.2% higher at $22,205, lead gained 1.1% to $1,913.50 and tin was down 0.6% at $18,365.