LONDON: Aluminium prices stumbled to their lowest in 16 months on Thursday while other based metals also slid on renewed worries about weak demand after downbeat economic data in top metals consumer China amid fresh COVID-19 lockdowns.
Benchmark aluminium on the London Metal Exchange (LME) fell 2.5% to $2,300 a tonne by 1600 GMT, its weakest since April 2021. A private sector survey showed China’s factory activity contracted for the first time in three months in August while nearly 70 Chinese cities reported declines in new home prices, the most since the start of the COVID-19 pandemic.
“Industrial metals are taking a beating. The growth angst is most certainly having a profound impact across markets and reducing risk appetite once again,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Also hitting prices was news that the Chinese metropolis of Chengdu announced a lockdown of its 21.2 million residents, and the dollar index spiked to a 20-year peak.
Factory activity was weak globally, surveys showed, while Hansen said that an expected increase to interest rates next week by the European Central Bank also weighed on markets.
“The supply side in metals could still be equally challenged, but right now the focus is on the risk to demand from central bank actions,” Hansen said.
He added that investors were bailing out of some of their bullish positions in energy-intensive metals aluminium and zinc, which many analysts had expected to outperform because of production cutbacks in the face of high power prices.
LME tin tumbled 8.3% to a 19-month low of $20,895 a tonne.
“Tin prices lost support following a production ramp-up in August and persistently weak demand in major end-user sectors like electronics,” one China-based trader said.
The premium of cash copper over the three-month contract rose to $52 a tonne, up from $29 two days ago, indicating short-term tightness in LME supplies.
LME copper inventories have shed 13% over the past three weeks to the lowest levels in over two months.
LME copper lost 2.7% to $7,593.50 a tonne, zinc slumped 6.2% to $3,245, lead was down 2.4% at $1,904 and nickel dropped 5.1% to $20,325.
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