LONDON: Copper prices fell on Monday as rising COVID-19 cases and weaker than expected manufacturing data in China, the biggest consumer, raised concerns over demand weakness.
COVID restrictions are affecting factories in numerous Chinese cities and the yuan fell to its weakest since 2007, making dollar-priced metals costlier for local buyers.
Benchmark copper on the London Metal Exchange (LME) was down 1.5% at $7,437 a tonne in official open-outcry trading.
Prices of the metal used in the power and construction industries have fallen more than 30% from their March peak as Chinese economic growth has faltered and Europe and the United States look likely to enter recessions.
“Sentiment towards China is very bearish at the moment. You can’t rule out that copper will dip below $7,000, but that should be a buying opportunity,” said Julius Baer analyst Carsten Menke, pointing to expectations of tight copper supply in the coming years.
China’s central bank again said it will step up credit support for the economy and keep the yuan steady.
However, investors remain unsettled by the appointment at a Communist Party Congress this month of loyalists to President Xi Jinping and a stepping up of zero-COVID policies.
Elsewhere in the world, the US Federal Reserve is expected to raise interest rates by another 75 basis points this week, stifling economic growth in an attempt to bring down rampant inflation.
The Bank of England is also poised for a bumper rate increase and European inflation surged past expectations yet again, reaching a record high that suggests more rate rises could follow.
LME aluminium was down 0.3% at $2,205 a tonne, zinc slid 3.9% to $2,712, nickel lost 1.5% to $21,810, lead fell 1.5% to $1,957 and tin was down 2.3% at $17,690.