LONDON: Copper prices touched their lowest in more than a month on Thursday, pressured by weak demand in top metals consumer China and an expected slide into recession in some Western countries.
Three-month copper on the London Metal Exchange dropped 0.9% to $8,479 a tonne by 1015 GMT after hitting its lowest since March 16.
Data on Thursday showed that profits at Chinese industrial companies fell 19.2% in March, underlining fragility in a sector that is a key consumer of metals.
“China’s recovery from COVID and from the weakness last year is only taking place gradually in the industrial and construction sectors,” said Edward Gardner at Capital Economics.
Chinese companies that make copper products told Reuters they are cutting output for the second quarter, typically the peak demand season, because of a slower than expected recovery in domestic consumption after COVID-19 and sluggish exports.
Copper prices edge higher; demand concerns in China cap gains
The most-traded June copper contract on the Shanghai Futures Exchange fell 0.8% to 66,560 yuan ($9,612.66) a tonne.
Chinese demand is expected to weaken more next week as the country enters a May 1-3 holiday.
There have been some imports of copper into China backed by open import arbitrage, but with the holidays next week the LME price could lose as much as $300 a tonne in the next few sessions, one trader said.
Wider global economic concerns fuelled by weak data from the United States is also weighing on the market, Gardner added.
“We expect the U.S. economy later this year to enter into a soft recession and we think over the next few months industrial metals prices will struggle, fall a bit further, due to developed economy weakness,” he said.
Denting sentiment further were troubles in the U.S. banking sector.
LME aluminium shed 0.8% to $2,309.50 a tonne, zinc dropped 1.6% to $2,604, tin was down 0.8% at $25,550 while nickel added 0.4% to $23,740 and lead rose 0.2% to $2,110.
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