Monday, August 15

Copper slides as firmer dollar, recession fears choke demand


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Copper prices fell on Wednesday to their

lowest since November 2020, weighed down by a robust US dollar

and threats to demand from heightened fears of a global

recession and renewed lockdowns in top consumer China.

Three-month copper on the London Metal Exchange was

down 2.5% at $7,483 a tonne, as of 0440 GMT, its lowest since

November 27, 2020.

The most-traded August copper contract in Shanghai

dropped 5.5% to 57,550 yuan ($8,582.76) a tonne by the midday

break.

The dollar stood tall near a 20-year peak against the euro,

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making greenback-denominated metals more expensive for other

currency holders.

“The base metals complex remains pressured by macro

headwinds stemming from China’s COVID lockdowns and the impact

of monetary policy tightening and slowing global growth on

demand,” Standard Chartered said in a note.

Adding to slowdown worries, business growth across the euro

zone slowed further last month, according to a survey in which

forward-looking indicators suggested the region could slip into

decline this quarter.

In 2022, supply side may exceed the demand side in base

metal complex. Investors are refraining to take a large position

in this market as recession fears mount, said Vandana Bharti,

assistant vice-president of commodity research at SMC Comtrade.

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COVID: China is fighting COVID-19 flare-ups on multiple

fronts across the country including an emerging cluster in

Shanghai, spurring mass testing drives and fresh restrictions.

INTEREST RATES: Central banks around the world are raising

interest rates sharply to rein in soaring inflation, restraining

economic growth.

MARKETS: Asian stocks slipped as investors’ fears deepened

that the continent is leading the world into recession.

OTHER METALS: LME aluminum fell 1.3% to $2,361.50 a

tonne, zinc lost 1.1% to $2,960, lead fell 0.5%

to $1,928.50, and tin dipped 4.4% to $24,860.

Shanghai aluminum lost 3.6%, zinc fell

2.3%, nickel dropped 4.6%, lead eased 0.4%,

and tin shed 5.6%.

($1 = 6.7053 Chinese yuan)

(Reporting by Brijesh Patel in Bengaluru)



financialpost.com