LONDON: Copper prices slumped on Thursday after the U.S. Federal Reserve failed to provide a clear signal for less aggressive rate hikes as a global slowdown curbs demand for metals.

Three-month copper on the London Metal Exchange slid 2% to $7,478 a tonne by 1100 GMT after dipping 0.3% on Wednesday.

Fed Chair Jerome Powell said the battle against inflation will require borrowing costs to rise further and said it was “very premature” to discuss when the Fed might pause its increases.

“The market wasn’t expecting the Fed to remain so doggedly hawkish. Prices are taking a hit today. In the next few days, equity and commodity markets will probably stay under pressure while it all adjusts to this prolonged rate policy,” said Tom Price, head of commodities strategy at Liberum.

“We’ve got the Fed’s robust rate hike extended for another month, China’s economy shrinking and Russia’s war continuing. To me, that’s all pretty bearish for commodities.”

Copper edges lower as manufacturing slump points to weak demand

The most traded December copper contract on the Shanghai Futures Exchange slipped 0.4% to 63,350 yuan ($8,669.65) a tonne.

“Domestically (in China), the epidemic has repeatedly impacted the economy, and the overall macro forecast is still bearish,” said Jinrui Futures in a note.

China recorded 3,200 daily local COVID-19 cases for Nov. 2, the highest in two and a half months.

LME zinc shed 3% to $2,665 a tonne after available LME inventories - those not earmarked for removal - soared by 59% to 36,625 tonnes, LME data showed.

Among other metals, LME aluminium eased 1% to $2,228 a tonne, nickel gave up 2.4% to $23,555, lead fell 1.3% to $1,963 and tin dropped 1.2% to $17,820.