Monday, October 18

Copper falls as global energy crisis spooks markets

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LONDON — Copper prices fell on Tuesday as soaring energy costs raised concerns that the global economic recovery might be derailed, though signs that supplies of the metal are tightening limited losses.

Benchmark copper on the London Metal Exchange (LME) was down 0.9% at $9,458 a tonne at 1614 GMT, snapping three days of gains.

Prices rose to a record high of $10,747.50 in May before slipping as the world’s economic recovery began to falter.

Logistics bottlenecks, however, have helped drive copper stocks to “historically low” levels in regions that use the metal, analysts at JPMorgan said in a note.

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“This remains an upside risk in the near term,” they said, even though supplies remained robust.

“We maintain a bearish bias on prices and forecast an $8,900/t average in 4Q21 with prices moving back down towards an average of $8,200/t in 4Q22,” they said.

MARKETS: Stock markets fell hardest in Asia, as authorities from Beijing to Delhi scrambled to fill a yawning power supply gap.

CHINA CONSTRUCTION: China Evergrande Group missed its third round of bond payments in three weeks, intensifying market fears over contagion.

CHINA EXPORTS: China’s export growth likely slowed in September, a Reuters poll showed.

DOWNGRADE: The International Monetary Fund cut growth outlooks for the United States and other major industrial powers.

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COPPER STOCKS: On warrant copper inventories in LME-registered warehouses have fallen to 65,500 tonnes from almost 240,000 in August.

Stocks in Shanghai Futures Exchange (ShFE) warehouses are near 12-year lows at 50,062 tonnes and inventories in Chinese bonded warehouses have almost halved since July.

COPPER SPREAD: The premium for cash copper over the three-month contract on the LME shot up to nearly $70 a tonne, the highest since 2015. A premium points to tight supply of metal.

CHINA PREMIUM: Chinese Yangshan copper import premiums rose to $130 a tonne, the highest since 2014, pointing to strong demand in China for overseas metal.

LEAD/ZINC: The global lead and zinc markets will be slightly oversupplied this year and next, the International Lead and Zinc Study Group (ILZSG) said.

OTHER METALS: LME aluminum was up 0.2% at $3,068.50 a tonne, zinc rose 0.4% to $3,244, nickel fell 0.7% to $18,980, lead was down 1.1% at $2,202 and tin was 0.2% higher at $36,445. (Reporting by Peter Hobson; Additional reporting by Mai Nguyen; Editing by Emelia Sithole-Matarise and David Clarke)

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