LONDON: Copper hit a one-month low and most other industrial metals stumbled on Friday on concern that rapid monetary tightening and Chinese COVID lockdowns will depress economic growth and metals demand.
Benchmark three-month copper on the London Metal Exchange (LME) slid 1.8% to $10,097 a tonne by 1620 GMT, the weakest since March 17, and was set for a third weekly decline.
“We have multiple factors weighing on copper and the other metals, particularly from the macro side, such as increasing worries about a potential recession in the United States,” said Wenyu Yao, senior commodities strategist ING Bank.
The head of the US Federal Reserve on Thursday said that a half-point interest rate increase “will be on the table” when it meets next month, suggesting aggressive measures ahead.
COVID restrictions in top metals consumer China were also weighing on metals.
“Initially it was going to be a snap lockdown in Shanghai, but it’s over a month now and nobody knows when it will end. That’s another big worry,” Yao said.
Industrial output in Shanghai, China’s most populous city, slumped in March for the first monthly decline in two years after stringent lockdown measures halted production in some factories.
Rising copper inventories in LME-approved warehouses also dampened prices, with the total having gained 72% over the past month.
- LME zinc briefly rebounded after data showed another big decline in on-warrant LME stocks, which are not earmarked for delivery. The on-warrant stocks fell by 25% to 33,975 tonnes, the lowest level since November 2019.
Zinc prices fell 1.6% to $4,380 a tonne.
- Also weighing on the market was a firmer dollar index , making dollar-denominated metals more expensive for buyers using other currencies.
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