LONDON: Copper prices sank to five-week lows on Monday as the deteriorating demand outlook in top consumer China was reinforced by debt problems in its property sector, a major consumer of the industrial metal.
Benchmark copper on the London Metal Exchange (LME) was little changed at $8,291 metric ton from an earlier $8,251, the lowest since July 7. Prices of the metal used in the power and construction industries have dropped 7% since Aug 1.
Traders said China’s Country Garden, the country’s top private property developer, suspending trading of its 11 onshore bonds had thrown the spotlight on the property sector.
“China probably isn’t going to provide a big stimulus for its housing market, but it does need to be stabilised,” said Bank of America analyst Michael Widmer, adding that China’s monthly loan data had added to negative sentiment.
Widmer expects to see a small copper market deficit of 253,000 tons this year and global consumption at 25.6 million tons, up 1.8% from 2022.
Copper on track for biggest weekly decline in three months
China’s new bank loans tumbled in July and other key credit gauges also weakened, even after policymakers cut interest rates and promised to roll out more support for the faltering economy.
Traders and analysts are waiting for Chinese data on industrial production, urban investment house prices and GDP due later this week, seeking clues on the health of the world’s second largest economy.
Elsewhere, aluminium fell to $2,152 a ton, the lowest since July 10, due to slowing demand around the world. Prices of the metal used in the transport, packaging and construction were last down 1% at $2,513 a ton.
Analysts expect the aluminium market to see a deficit this year, but not as large as the shortfalls seen in 2022.
Overall, base metals are under pressure from a higher U.S. currency, which when it rises makes dollar-priced commodities more expensive for holders of other currencies.
In other metals, zinc fell 1.7% to $2,356 a ton, lead slipped 0.2% to $2,104, tin retreated 3.2% to $25,600 and nickel was flat at $20,210.
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