Tuesday, October 19

Copper price drops as energy crisis stokes demand fears


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London copper prices fell on Tuesday, weighed down by worries over demand as rising electricity prices raised concerns that downstream consumers would be forced to cut production.

Three-month copper on the London Metal Exchange (LME) fell 1.6% to $9,396 a tonne by 0703 GMT. The most-traded November copper contract on the Shanghai Futures Exchange firmed slightly, rising 0.2% to 69,680 yuan ($10,799.42) a tonne, tracking overnight gains in London.

LME aluminum declined 0.5% to $3,050 a tonne, zinc was down 0.2% at $3,224 and tin lost 1% to $36,005.

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ShFE aluminum rose 2% to 23,495 yuan a tonne, zinc advanced 2.3% to 23,730 yuan and tin slid 2% to 277,510 yuan.

Power prices have risen to record highs in recent weeks, driven by energy shortages in Asia, Europe and the United States as the pace of economic recovery from the COVID-19 pandemic has supercharged energy demand.

“Higher electricity prices and lower factory operating rates mean lower demand for raw materials,” said one Singapore-based metals trader.

Sentiment was also dented by the People’s Bank of China withdrawing liquidity, the trader said, signaling a potential pullback in economic stimulus.

Another missed debt payment by property giant China Evergrande also hit confidence in the Chinese real estate sector, which consumes a large amount of metals.

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However, further falls in metals prices were cushioned by concern over disruption to output because of the energy crisis as well as rising interest in owning metals as a hedge against inflation.

“This is a retrace for a move higher. Queues that have built up in order books still need to be fulfilled,” the Singapore-based trader said.

FUNDAMENTALS

* Chilean state miner Codelco will produce 2-3% more copper this year than previously expected, its chairman said.

* China’s major copper smelters kept September output flat month on month because of maintenance and power curbs, Antaike said on Monday.

* For the top stories in metals and other news, click or ($1 = 6.4522 yuan) (Editing by Subhranshu Sahu and David Goodman)



financialpost.com

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