London aluminium prices dropped to a six-month low on Monday, as worries grew that rising COVID-19 cases in Beijing and prospects of elevated interest rates for a longer time would hit global economic growth and dent demand for metals.
Three-month aluminium on the London Metal Exchange slipped 1.3% to $2,646 a tonne, as of 0715 GMT, after hitting its lowest since Dec. 16 at $2,616.50 earlier in the session.
The most-traded July aluminium contract in Shanghai ended daytime trading down 2.8% at 19,995 yuan ($2,970.05) a tonne.
Copper, often used as a gauge of global economic health, was down 0.8% at $9,375.50 a tonne, after hitting a more than two-week low earlier in the session.
“Metals outlook in the near term is likely to remain under pressure. The Chinese market is heading to a traditionally soft period in the coming weeks, on top of new threats of lockdowns and a sluggish economy,” said Paul Adkins of AZ Global Consulting.
“Also, the recent scandal with warehouses in China has sent traders back into their tents. However, there are some upward price opportunities due to the warehouses being closed limiting some metal supplies.”
An investigation into the fraudulent use of aluminium stocks to raise finance in China has expanded to three Shanghai-based companies suspected of having pledged aluminium stocks several times over, the state-backed Securities Times reported.
Risk sentiment in wider financial markets remained weak as worries about even more aggressive Federal Reserve policy tightening, and a COVID-19 warning from Beijing dented investors’ appetite.
Authorities in Beijing raced to contain a COVID-19 outbreak traced to a raucous 24-hour bar, with millions facing mandatory testing and thousands under targeted lockdowns.
Data showed the US consumer price index accelerated to 1% in May from 0.3% in April, suggesting that the Fed could continue with its 50 basis points interest rate hikes through September to combat inflation.
Dollar: The US dollar jumped to a near one-month high against its rivals, making greenback-denominated metals more expensive for buyers using other currReuters
Inventories: Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 18.7% from last release on June 02.
Other metals: LME zinc fell 1.7% to $3,630, nickel lost 2.8% to $26,505, lead dipped 1.3% to $2,121, and tin fell 2.4% to $34,435.
Shanghai copper was down 1.1%, zinc slipped 1.2%, nickel fell 4.4%, lead edged 0.5% lower, and tin dropped 3.7%. Reuters
Comments
Comments are closed.