LONDON: Aluminium and copper prices slipped on Wednesday on worries about declining demand after data from top metals consumer China highlighted a weak construction sector.
Three-month aluminium on the London Metal Exchange dropped 1.7% to $2,448 a tonne in official open outcry trading.
China’s factory-gate inflation eased to a 17-month low in July, data showed on Wednesday, as a slower domestic construction sector weighed on raw material demand.
The construction sector is a key demand driver for both copper and aluminium.
LME copper was little changed at $7,983.50 a tonne after earlier easing to $7,889.
“That was the initial reason for the weakness in the market overnight, but the market seems to be getting a little more resilient to this kind of news,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“In the short-term, we still have recession fears, what is going on in China and geo-political risks. That has just taken the temperature out of the investment appetite over the past few months.”
Traders were nervous ahead of U.S. consumer inflation numbers due at 1230 GMT, likely to show that July prices rose at an 8.7% annual pace, according a Reuters poll, which would be a small downward correction from June’s whopping 9.1%.
Even if the data comes in softer than expected, the U.S. Federal Reserve is expected to hike interest rates in its September meeting, continuing a campaign to bring down inflation which some investors fear could spur a recession.
The most-traded copper contract on the Shanghai Futures Exchange, September, dipped 0.3% to 61,040 yuan ($9,031.99) a tonne.
The premium of cash LME zinc over the three month contract rose to $127 a tonne, the highest since late June, indicating tightness in near term LME supplies as investors worry that high energy prices will force smelters to curb output.
Benchmark LME zinc shed 0.4% to $3,521 a tonne after touching its highest level since June 22.
LME nickel eased 0.8% to $21,400 a tonne, tin declined 3% to $23,700 and lead fell 0.3% to $2,158.50.
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