Copper prices slumped to their lowest in nearly two months as investors weighed prospects of improved demand from China’s construction sector against slowing global growth amid rising interest rates and an escalating war in Ukraine.
Three-month copper on the London Metal Exchange (LME) was down 3.2 percent to $7,430 a tonne, its lowest since July 25.
Commenting on the heavy fall of the red metal, Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said, “The macro outlook is hitting industrial metals quite hard. The main worry is that central banks will allow the economy to slip into recession in an attempt to bring inflation under control.
Hansen added that with copper now trading below $7,475 a tonne, traders will be eyeing the $6,955 20-month low touched on July 15.
For other metals on the LME, aluminium lost 0.1 percent to $2,226 a tonne, zinc gained 0.1 percent to $3,109.50 a tonne, while tin shed 0.5 percent to $21,550 a tonne.
In the Shanghai market, zinc was up 1.1 percent to 24,945 yuan a tonne, nickel declined 1.2 percent to 193,800 yuan a tonne, while aluminium advanced 0.8 percent to 18,760 yuan a tonne, supported by a rebound in LME aluminium prices the previous day.
Reports that the global economy is on a recession path has kept investors on edge, while worries that aggressive monetary policy tightening would further slow the global economy dampened the demand for metal.
During the week, the U.S. Federal Reserve delivered a 75-basis-point rate hike to further curtail inflationary pressure, while the Bank of England went for a 50-bp rise in its bid to control inflation.
Sentiment has also been hit by Russia’s recent mobilisation campaign in its invasion of Ukraine. An escalation of the lingering conflict loomed after President Vladimir Putin raised the stakes by ordering a Russian mobilisation to fight in Ukraine, while hinting that he was prepared to use nuclear weapons if the need arose.
