Copper prices dropped on Thursday on challenging demand outlook and soured risk sentiment amid expectations for a protracted policy tightening by the US Federal Reserve.
Three-month copper on the London Metal Exchange was down 0.1% at $7,621 a tonne, as of 0521 GMT, while the most-traded December copper contract on the Shanghai Futures Exchange slipped 0.3% to 63,380 yuan ($8,681.24) a tonne.
The US Fed raised interest rates by three-quarters of a percentage point on Wednesday, and Chair Jerome Powell said the central bank was still undecided about how high rates would need to rise to curb inflation.
“Staying (hawkish) longer will be bearish for copper prices. Domestically (in China), the epidemic has repeatedly impacted the economy, and the overall macro forecast is still bearish,” said Jinrui Futures in a note.
China recorded 3,200 daily local COVID-19 cases for Nov. 2, the highest in two-and-a-half months. LME tin dropped 2.8% to $17,505 a tonne, lead fell 0.3% to $1,982.50 a tonne, while aluminium rose 0.6% to $2,263.50 a tonne.
SHFE tin shed 2.7% to 155,800 yuan a tonne, lead fell 0.4% to 15,115 yuan a tonne, while nickel rose 0.8% to 192,470 yuan a tonne and aluminium climbed 1.7% to 18,175 yuan a tonne.
Weaker dollar pushes copper higher
The fall in metal prices was cushioned by hopes of an easing in COVID-19 restrictions in top consumer China, which could boost economic growth and metals demand.
“China’s zero-COVID policy is weighing on industrial and construction activity. Any relaxation in the policy should be a positive surprise for the sector,” ANZ analysts said in a note.
Meanwhile, the world’s refined copper market showed a 16,000 tonne deficit in August, compared with 80,000 tonnes in July, the International Copper Study Group said.
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