LONDON: Prices of copper and other industrial metals fell on Wednesday as surging coronavirus infections raised fears that new lockdowns will stifle economic recovery.

Stock markets and oil prices plunged and the dollar strengthened as Germany and France prepared new restrictions, Russia said the situation was worsening and hospitalizations and cases rose sharply in the United States.

Benchmark copper on the London Metal Exchange (LME) was 0.9% lower at $6,740 at 1706 GMT, down around 4% from a 28-month high of $7,034 reached last week.

“We’re talking about potential new lockdowns in Europe, with cases just galloping. It’s really hitting markets in the stomach,” said Saxo Bank analyst Ole Hansen. Copper’s falls could accelerate if some of the many speculators who have bet on higher prices are forced to exit their positions, he said.

A stronger dollar makes metals costlier for buyers outside the United States, which can reduce demand.

Speculators have built the biggest net long position in copper on the Comex exchange since the start of 2018.

The Chinese economy is expected to grow 2.1% this year, its weakest pace in more than four decades, but output could rebound sharply in 2021, a Reuters poll showed. China is the world’s biggest metals consumer. The outlook for the US economy has dimmed, analysts say. The German economy is likely to have grown by about 6% in the third quarter but the recovery will probably slow, the DIW institute said.

LME nickel was down 1.2% at $15,715 a tonne, having earlier touched $16,310, the highest since November, after a coronavirus outbreak at the Philippines’ top nickel ore producer Nickel Asia Corp threatened supply.

LME aluminium was down 0.9% at $1,805 a tonne, zinc fell 0.5% to $2,533 and tin was 0.3% lower at $18,010.

Lead bucked the trend, rising 1.3% to $1,800.—Reuters