LONDON: Copper resumed its decline on Friday on persistent concerns about depressed demand due to an economic downturn in top consumer China and a potential global recession.
The metal had gained earlier in the session on the prospect of a strike in the world’s biggest copper producer Chile.
Three-month copper on the London Metal Exchange shed 1% to $8,982 a tonne by 1600 GMT after touching the lowest since October last year and slumping by 1.7% on Thursday. It was on track to fall about 5% this week.
“Monetary tightening, particularly by the Fed, is typically negative for demand prospects for metals,” said Caroline Bain, chief commodities economist at Capital Economics in London.
Equity markets were headed for their worst week since their pandemic meltdown in March 2020 as major central banks tightened policy in an effort to tame inflation, setting investors on edge about future economic growth.
In European morning trade, copper was boosted by news that workers at Chilean state-owned Codelco will go on strike if they do not receive a favourable answer from the company’s board of directors Friday.
But that was later offset by renewed worries about a slowdown in China and uncertainty about its COVID-19 restrictions.
“Industrial metals are really not sure what direction to take on China. One day there’s a headline saying everything’s opening up. The next day there’s a partial close-down again,” Bain said.
LME aluminium added 0.04% to $2,505.50 a tonne after falling to its lowest since July 28 at $2,487 on Thursday. The contract is down about 6% so far this week.
Also weighing on metals was a firmer dollar index, making greenback-priced commodities more expensive for buyers using other currencies.
China’s refined copper production in May 2022 rose 4.7% year on year to 0.91 million tonnes, data showed on Friday.
Shanghai’s economy contracted for a second month in May although at a somewhat slower pace, data showed, weighing on the commercial hub’s recovery prospects following a two-month COVID lockdown.
LME zinc slipped 1.6% to $3,520.50 a tonne, lead dropped 1.9% to $2,060.50, tin eased 2.3% to $31,260, but nickel gained 1.8% to $25,720.
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