LME Commentary

 

Three-month copper on the LME was down 1.8 percent at $9,447 a tonne by 1600 GMT. Copper had fallen 1.2% on Thursday.

 

Copper is used in the power and construction industries and is also widely seen as a barometer of global economic growth. Since hitting an all-time high of $10,845 in early March, it is down about 12.9% so far as demand for the metal is hit by concerns over high inflation in major economies such as the U.S. and a recession triggered by higher interest rates, with slumping economic growth in China hitting demand for the metal.

 

This week, LME copper futures fell by $23 or 0.24%. In contrast, copper has rebounded continuously in the past two cycles, with a cumulative increase of $415/ton.

 

Analysts said the copper market faces a variety of pressures. Major central banks, including the Federal Reserve, remain very hawkish, raising concerns about whether growth outside China will decelerate more quickly.

 

In China, foreign trade data came out this week better than expected, with China's copper concentrate imports reaching a record 2.19 million tonnes in May. Unwrought copper imports in May were 465,495 tonnes, up 4.4% from 445,725 tonnes a year earlier and also slightly higher than April's 465,300 tonnes as imports from overseas became profitable. Analysts at consultancy CRU said that as the epidemic situation in some parts of China improved in mid-May, some LME inventories were allowed to be shipped to China. The re-opening of the arbitrage window in May also supported import growth.

 

But the repeated outbreaks in Beijing and Shanghai in recent days have raised fears that economic growth may face headwinds again.

 

Three-month aluminum fell 3 percent to $2,677 a tonne on Friday, its lowest since December. Analysts at Standard Chartered said the fall in aluminium prices was due to uncertain growth prospects, weaker demand from the auto industry and continued recovery in Chinese production.

 

Other risk assets also fell on Friday, with stocks hitting fresh two-week lows as the European Central Bank planned to raise interest rates and U.S. consumer price data hit a 40-year high in May, beating market expectations, stoking worries about global growth.

 

A rally in the U.S. dollar index on Friday was also generally bearish for London industrial metal futures, as it meant the dollar-denominated metal was more expensive for buyers of other currencies.

 

Chinese factory inflation fell in May and demand for steel, aluminum and other industrial goods softened, official Chinese data showed.

 

In Peru, an indigenous community agreed on Thursday to temporarily lift protests at the Las Bambas copper mine. Protests since April have halted operations at the mine for more than 50 days.

 

Other metals at the close included LME nickel down 2.6% at $27,285 a tonne, zinc down 1.6% at $3,700 a tonne, lead down 2.1% at $2,150.50 a tonne and tin down 5% at $34,915 a tonne Dollar. (over)