LME Commentary

 

Crude oil and stocks fell, reflecting rising investor risk aversion, also weighing on industrial metals.

 

Benchmark three-month copper on the LME was down 2.7% at $8,757 a tonne by 1600 GMT. It touched $8,656 in early trade, also the lowest since March 4, 2021.

 

When the global epidemic broke out in March 2020, copper prices once fell below $5,000 per ton, and then soared as the global economic recovery and green transition drove demand growth and global supply was insufficient. The Russian-Ukrainian conflict in late February and Western sanctions further stoked supply concerns, pushing copper to an all-time high of $10,845 a tonne in early March. However, as the Federal Reserve started the interest rate hike cycle in March, it was feared that the global economy was stagnant or recession, and copper prices also fluctuated and fell. Copper prices are now about 19.3% below their all-time peaks, although well above where they were for most of the past decade.

 

Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said industrial metals were pressured by demand-side concerns. The overall outlook for the global economy is worrying. The Federal Reserve aggressively raised interest rates last week, fueling growing concerns about the global economy's ability to handle rapid rate hikes. In addition, the technical picture for many LME industrial metals is deteriorating. Hansen said that if copper falls below the $8,700 support, it will trigger further losses.

 

U.S. central bank governor Jerome Powell said on Wednesday that the Federal Reserve is firmly committed to reducing inflation, which is at a 40-year high, and that central bank policymakers are moving quickly to achieve that goal. Economists expect the Fed to raise rates by another 75 basis points in July, followed by a 50 basis point hike in September.

 

In its latest monthly report, the International Copper Research Organization said the world refined copper market had a surplus of 3,000 tonnes in April, while in March there was a supply deficit of 22,000 tonnes.

 

In other metals, aluminium was down 2.1% at $2,480 a tonne on the LME after hitting its lowest since July last year.

 

Lead fell 2.2% to $2,019.50 a tonne after hitting its lowest since April 2021.

 

Nickel fell 5.7% to $24,465 a tonne, its lowest since March 1.

 

Tin fell 7.1 percent to $29,120 a tonne, its lowest level since May last year.

 

Zinc slipped 1.1 percent to $3,551.50 a tonne. (over)