LONDON: Copper prices fell to their lowest in more than two weeks on Monday after US central bank chief Jerome Powell warned of a painful period of slow economic growth and as COVID-19 restrictions in top consumer China hit sentiment.
Benchmark copper on the London Metal Exchange (LME) was down 3.5% at $7,875 a tonne by 1603 GMT, having touched its lowest since Aug. 8 at $7,846.
The US Federal Reserve is expected to raise interest rates by 75 basis points for a third consecutive policy meeting in September as it seeks to combat inflation. Powell also said the Fed will not quickly dial back on monetary policy until inflation is under control.
“Copper prices have been hit recently by concerns over a ‘hard landing’ after Powell’s speech last Friday,” said Giles Coghlan, analyst at broker HYCM.
“This week US labour data will be in key focus and I expect base metals to take their next cue from there.” Powell’s warning on interest rates has also pushed the dollar to 20-year highs against other major currencies, making dollar-priced commodities more expensive for holders of other currencies, which would subdue demand.
Further upward impetus for the dollar came from strong US consumer confidence and job openings data.
Concern about Chinese demand was reinforced after Shenzhen shut the world’s largest electronics market of Huaqiangbei and suspended service at subway stations to curb a COVID-19 outbreak.
Industrial metals markets will take their cue from a survey of purchasing managers in China’s manufacturing sector, due on Wednesday. Expectations are for further shrinkage.
In more bullish news, China has announced billions of yuan in stimulus support for various sectors, including infrastructure and electric vehicles.
“There is a view that Chinese stimulus will help,” said Bank of America analyst Michael Widmer. “But there is also apprehension about demand, particularly outside China.” For aluminium, the resumption of power in Sichuan province will increase supplies in China, but analysts say power problems in Europe will provide support for prices.
Aluminium was down 4.1% at $2,390 a tonne, zinc fell 2.5% to $3,475, lead gained 0.1% to $1,987, tin tumbled by 4.4% to $23,650 and nickel was down 1% at $21,415 a tonne.
Source: Brecorder
