LONDON: Copper prices headed towards their biggest weekly decline since October on Friday as the prospect of central bank tightening reduced investor appetite for risky assets, hammering equities and boosting the dollar.

European and US stocks fell again and Chinese equities slumped to 16-month closing lows while the dollar was at its strongest against a basket of major rivals since June 2020, making metals costlier for non-US buyers.

Benchmark copper on the London Metal Exchange (LME) was down 1.7% at $9,620 a tonne in official trading and down about 3.5% this week. Prices hit a record high of $10,747.50 in May but stalled as worries emerged over the strength of economic growth, particularly in top consumer China.

Price weakness could last through China’s New Year public holiday next week, typically a time of low demand, said Saxo Bank analyst Ole Hansen.

He added, however, that the longer-term outlook remains positive, with a global transition from fossil fuels to copper-intensive electrification likely to boost demand.

CHINA: Plans to support China’s slowing economy with infrastructure spending will face hurdles, policy insiders and economists said.

INFLATION: High inflation will haunt the global economy this year, according to a Reuters poll of economists who have trimmed their global growth outlook.

SUPPLY: UBS analysts said they still expect industrial metals prices to rise by 10-15% this year. “We expect almost all metal markets to be undersupplied,” they said.

SPREADS: Premiums for cash copper and nickel over the three three-month contracts climbed, suggesting tight supply.

ALUMINUM: LME aluminium was down 0.4% at $3,085 a tonne but up about 2% for the week, its fourth consecutive weekly gain and close to October’s 13-year high of $3,229.

High power prices have forced some smelters to cut production and traders are concerned that a Russia-Ukraine conflict could interrupt exports from Russia, a major producer of aluminium, nickel and palladium.