LONDON: Aluminium and some other base metal prices slumped on Tuesday as concern grew that a global economic downturn and rising COVID-19 cases in top consumer China would curb demand.
A reversal that saw the dollar index ease in the European afternoon spurred some metals to pare losses and pushed others into positive territory.
A stronger dollar in the morning weighed on the market, making commodities priced in the US currency more expensive for buyers using other currencies.
Three-month aluminium on the London Metal Exchange (LME) was down 0.9% to $2,240 a tonne at 1610 GMT, but LME copper erased earlier losses and added 0.2% to $7,593.
US Comex copper futures rose 0.6% to $3.45/lb.
Copper on the LME has slid 31% since touching a record peak of $10,845 in March as central banks ramped up interest rates to dampen inflation and COVID-19 lockdowns in China exacerbated economic growth worries.
“I think the market got a bit complacent last week regarding a pivot, but that quickly subsided,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International.
She was referring to investor hopes the US Federal Reserve would back off interest rate rises and signal a cut.
“The market should be prepared for further tightening policies, not only by the Fed, but other major global central banks, so that will cap any price advances,” Fu said.
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