LONDON: Copper prices eased on Wednesday as worries about tensions between the United States and top metals consumer China added to concern that more interest rate hikes would depress global economic activity.
Three-month copper on the London Metal Exchange was down 1.6% to $7,683 a tonne by 1610 GMT, the third straight day of losses.
US Comex futures dropped 1.7% to $3.46 a lb.
China furiously condemned the highest-level American visit to Taiwan in 25 years by US House of Representatives Speaker Nancy Pelosi, and Taiwan scrambled jets on Wednesday to warn away 27 Chinese aircraft in its air defence zone.
“There’s quite a lot worry about Pelosi’s visit to Taiwan. The hopes were that after Biden took office the US-China relationship would improve and now it seems to be hitting a new low,” said Naeem Aslam, chief market analyst at AvaTrade.
“What we see among investors and traders is they are worried that these new geopolitical tensions are going to have an adverse impact on demand for copper and other industrial metals.” Chinese stock markets extended losses on worries about the risk of escalation of tensions over Taiwan while iron ore prices fell amid the crisis in China’s property market.
The geopolitical worries come on top of renewed fears about a potential global recession as a Federal Reserve official on Wednesday said the US central bank will be tough in its quest to bring down inflation.
“The Fed’s upcoming interest rate decisions remain the biggest uncertainty in the market given the likely steady growth path in China,” said Zhao Yi, a metals analyst at COFCO Futures.
Hopes about a slower pace of rate hikes and Chinese stimulus had helped copper rebound about 15% after touching 20-month lows on July 15.
LME aluminium fell 1.3% to $2,382.50 a tonne, zinc dropped 1% to $3,277.50, lead eased 1.4% to $2,022, nickel shed 0.8% to 22,315 and tin gave up 0.5% to $24,130.
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