Copper prices slipped to their lowest level in nearly two months on Friday on a strong dollar and fears of recession-hit metal demand for more rate hikes.
The 3-month copper CMCU3 on the London Metal Exchange (LME) was down 3.2% to $7,430 a tonne by 1000 GMT, its weakest reading since July 25.
“The macro outlook is hitting industrial metals pretty hard. The main concern is that central banks will allow the economy to slide into recession in order to bring inflation under control,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Now that copper has slipped below $7,475 a tonne, traders will be eyeing the 20-month low of $6,955 hit on July 15, he added.
Other risky assets were drawn into the selling scramble, with stocks hitting two-year lows after investors realized aggressive US interest rate hikes are likely to last longer than previously expected.
The Dollar Index = USD climbed to its highest level in two decades, making US-currency commodities more expensive for buyers in other currencies.
However, tight supply and rising demand in China have recently supported metal prices.
“Power grid and new energy sectors have increased orders for copper products,” said a China-based copper producer.
Physical markets also saw increased demand as producers attempted to replenish inventories ahead of China’s National Day, Oct. 1-7.
But those optimistic elements were swept away by broader economic concerns, with surging LME copper inventories also dampening sentiment after skyrocketing by a fifth over the past week.
Among other metals, LME-Aluminum CMAL3 fell 1.9% to $2,186 a tonne, Zinc CMZN3 fell 2% to $3,045, Lead CMPB3 slipped 0.9% to $1,835, Nickel CMNI3 down 3.6% $23,675 and tin CMSN3 fell 2.7% to $21,070.
Source: Reuters (Reporting by Eric Onstad Additional reporting by Siyi Liu and Dominique Patton in Beijing Editing by David Goodman)