London copper and aluminium prices fell to a three-month low on Tuesday, as COVID-19 restrictions in top consumer China and the prospect of aggressive U.S. rate hikes fuelled worries about weaker global growth hitting metals demand.
Benchmark three-month copper on the London Metal Exchange (LME) was down 2.3% at $9,546 a tonne, as of 0432 GMT, its lowest since Jan. 31.
LME aluminium fell 1.5% to $3,008 a tonne, after hitting its lowest since Feb. 3. Zinc lost 3.6% to $3,961, lead eased 0.3% to $2,254 and tin fell 0.2% to $40,200.
The Shanghai Futures Exchange is closed for a public holiday.
“The Fed is about to embark on an aggressive rate hike tangent at a time when both China and EU economies are set to struggle, which is not great for copper prices especially with China expected to be in a protracted lockdown,” said Stephen Innes, managing partner at SPI Asset Management.
The U.S. central bank’s Federal Open Market Committee will begin its meeting on interest rates later in the day and is widely expected to hike borrowing costs by half-a-percentage point when it announces its decision on Wednesday.
Beijing is banking on mass testing to locate and isolate infections and avert a Shanghai-like lockdown. The capital of 22 million tightened COVID curbs over the five-day Labour Day holiday that runs through Wednesday.
Recent weak economic readings out of the world’s second largest economy also raised concerns over global growth expectations.
Copper: Peruvian indigenous communities occupying a key copper mine will agree to talks with officials and company representatives only if the government lifts its emergency order for the region, leaders of the groups told Reuters on Monday.
Dollar: The dollar held just below a 20-year high against its rivals, making greenback-denominated metals more expensive for buyers using other currencies.
Column-Copper, iron ore yet to reflect China’s weakening industrial outlook, said Reuters columnist Clyde Russell.