LONDON: Prices for copper and other base metals fell in London on Wednesday under pressure from global services activity data that darkened the demand outlook for growth-dependent metals.
Benchmark copper on the London Metal Exchange (LME) traded 1.2% down at $8,260 a metric ton by 1056 GMT.
Prices for the metal used in power and construction have retreated by 1.4% so far this year owing to a slower than expected post-pandemic recovery for top consumer China.
China’s services activity expanded at the slowest pace in five months in June, a private-sector survey showed on Wednesday, and euro zone business activity slipped into contractionary territory.
“The June set of global PMI (purchasing managers index) prints remained terribly poor on a historical basis, suggesting metals consumption will remain under pressure in the coming months,” Citi analysts said in a research note.
Gloomy demand outlook weighs on copper prices
Some investors still hope that possible Chinese economic stimulus will spur faltering economic growth, but Citi believes such optimism is excessive, it added.
Citi expects copper to average $8,000 a metric ton over the next three quarters and to trade in a range of $7,500 to $8,500.
Adding further pressure on demand for dollar-priced metals, the U.S. currency strengthened slightly while traders wait for the release of Federal Reserve minutes later on Wednesday for clues about the path of U.S. monetary policy.
Base metals have been unaffected so far by the latest twist in long-running trade spats between the United States and China, with the latter this week introducing export restrictions for gallium and germanium, which are used in semiconductors. However, an influential Chinese trade policy adviser said on Wednesday that these export curbs were “just a start”.
In other metals, LME aluminium declined 0.9% to $2,147.5 a metric ton, zinc shed 2.3% to $2,355, lead eased 0.8% to $2,076.5, tin was down 0.4% at $27,200 and nickel dipped 0.5% to $20,415.
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