LONDON: Copper prices fell on Tuesday, pressured by fears of slowing global economic growth that also pulled down equities, though a weakening dollar helped to limit losses.
Benchmark copper on the London Metal Exchange (LME) was down 0.9% at $9,467 a tonne at 1601 GMT.
Prices hit a seven-month low of $8,938 on May 12 but rebounded as the dollar weakened from 20-year highs, making metals cheaper for buyers with other currencies.
“Central banks are maintaining their hawkish stance to try to kill inflation, and killing inflation will also kill the economy,” said WisdomTree analyst Nitesh Shah, predicting further price pressure in the coming months.
However, he agreed with many other analysts who say the long-term outlook for copper remains strong because of low investment in new mines and demand generated by the green energy transition.
Copper, which is widely used in the power and construction sectors, reached a record high of $10,845 in March.
MARKETS: Shares slid worldwide, puncturing a mini-rally.
DAVOS: Threats to the global economy topped the list of worries at the annual Davos think-fest.
INTEREST RATES: The European Central Bank and US Federal Reserve signalled significant interest rate increases in the coming months in an effort to curb inflation.
CHINA: The Chinese government promised steps to support the economy, but COVID-19 lockdowns are hurting growth and trouble in the property sector is predicted to worsen.
DATA: Japan’s manufacturing activity expanded at the slowest pace in three months in May, euro zone and UK business growth slowed and US home sales fell.
POSITIONING: For the first time in two years most speculators expect copper prices to fall.
BEARISH: “Recent consumption run rates imply copper and aluminium shifted into surplus globally in April,” analysts at Citi said. “It will likely take some time for the balances to tighten ... we are most bearish on nickel, then copper, and least bearish on aluminium and zinc.”