London copper drops to nine-month low on recession fears

London copper prices hit a nine-month low on Monday, weighed down by fears that a potential global recession and coronavirus outbreaks in top consumer China could hammer demand for metals. Three-month copper on the London Metal Exchange (LME) was down 1% at $8,875 a tonne by 0726 GMT, its lowest since Sept. 21.

The most-traded July copper contract in Shanghai ended daytime trading down 2.3% at 68,000 yuan ($10,172.33) a tonne. Economic slowdown fears weighed on base metals, ANZ commodity strategists said in a note.

“This comes amid uncertainty around the demand outlook in China. Renewed outbreaks of COVID-19 have cast doubt on the recovery from lockdowns that have slowed down industrial activity. The market also appears to be ignoring supply side issues.” Mainland China reported 109 new coronavirus cases for June 19, of which 38 were symptomatic and 71 were asymptomatic, the National Health Commission said on Monday.

China left its benchmark lending rates for corporate and household loans on hold, with global central banks’ rate increases making it tough for Beijing to stimulate a weak domestic economy by lowering rates.

Last week central banks including the U.S. Federal Reserve raised interest rates to contain soaring inflation, reigniting worries over potential global recession.

Copper, which is used in power and construction and is widely viewed as a gauge of global economic health, has fallen more than 18% since scaling a peak of $10,845 in March.

COPPER: Workers at state-owned Chilean miner Codelco, the world’s largest copper producer, said on Saturday that they would start preparations for a national strike after the company announced the closure of its Ventanas smelter.

DATA: China’s May aluminium imports fell 16.4% year on year, government data showed on Saturday, amid high overseas prices and weaker domestic consumption. OTHER METALS: LME aluminium fell 0.5% to $2,485 a tonne, zinc eased 0.4% to $3,510, lead gained 0.4% to $2,070, nickel was down 0.9% at $25,450, and tin slid 3.1% to $30,205. Shanghai aluminium slipped 0.8%, with zinc falling 1.5%, nickel down 1.7%, lead off 0.2% and tin retreating by 4%. ($1 = 6.6848 Chinese yuan renminbi)

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