LONDON: Copper prices fell to two-month lows on Monday as fears of a global slowdown, weaker demand, a higher dollar and climbing stocks in London Metal Exchange (LME) registered warehouses sparked a sell-off.
Benchmark copper contract on the LME was down 1.3% at $7,335 a tonne at 1603 GMT from an earlier $7,292.5, the lowest since July 21.
“Doom and gloom about growth and repercussions for demand, the stronger dollar and inventory increase are pressuring the base (metal) complex,” a metals trader said.
The OECD said global growth is slowing more than was forecast following Russia’s invasion of Ukraine, as energy and inflation crises risk snowballing into recessions in major economies.
Stocks of copper in LME warehouses at 129,000 tonnes are up more than 25% since Sept. 15, while cancelled warrants - metal earmarked for delivery - are at around 7% compared with 50% in late August. The dollar against a basket of other major currencies is near its highest since May 2002, making dollar-denominated metals more expensive for holders of other currencies, which also weighs on demand.
Meanwhile, the premium for the cash over the three-month copper contract jumped to $105 a tonne due to market participants squaring their short positions, traders said.
Aluminium prices fell to 18-month lows of $2,133.50 a tonne, down 50% since a record high of $4,073.50 a tonne when the market tried to price in disruptions to Russian supplies due to the war in Ukraine.