LME Commentary

 

Three-month copper on the LME was down 1% at $8,982 a tonne by 1600 GMT, the lowest since October last year.

 

LME copper fell $465, or 4.92%, for the week, compared with a loss of $23, or 0.24%, last week.

 

Copper is used in the power and construction industries and is 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 17.2% so far, as fears of high inflation in major economies such as the United States and a recession triggered by higher interest rates have weighed on demand for the metal.

 

Monetary tightening by major Western central banks, including the Federal Reserve, to fight inflation has raised concerns about economic growth and slowing demand for metals, analysts said.

 

Copper briefly rose in early trade on Friday amid a possible strike in Chile, the world's top copper producer.

 

Workers at Chile's state-owned copper producer Codelco said they would go on strike if they did not receive a favorable response from the company's board on Friday.

 

However, the economic slowdown and the uncertainty brought about by the epidemic have brought the market down again. Caroline Bain, Chief Commodity Economist at Capital Economics in London, said that monetary tightening by central banks, especially by the Federal Reserve, is usually bad for the demand outlook for metals.

 

U.S. stocks posted their biggest weekly loss since the outbreak of the virus in March 2020 as major central banks tightened policy to curb inflation, unnerving investors about future economic growth.

 

Data on Friday showed U.S. factory production unexpectedly fell in May, the latest sign of cooling U.S. economic activity.

 

The U.S. dollar index rose 1 percent on Friday, weighing on the metal, making dollar-priced commodities more expensive for buyers using other currencies.

 

China's refined copper output in May 2022 rose 4.7% year-on-year to 910,000 tonnes, data on Friday showed.

 

Three-month aluminium on the LME was up 0.04% at $2,505.50 a tonne on Friday. Aluminum fell to $2,487 on Thursday, its lowest since July 28. London aluminium futures fell about 6% this week.

 

Other metals at the close included LME zinc slipping 1.6% to $3,520.50 a tonne, lead down 1.9% to $2,060.50 a tonne and tin down 2.3% to $31,260 a tonne, but nickel up 1.8% at $31,260 a tonne $25,720. (over)