BY Onome Amuge
Copper prices traded lower as concerns over decreased demand in top consumer China were exacerbated by a firmer dollar, while recession fears lingered prompting some analysts to talk of potential drop in demand for the red metal.
Benchmark copper on the London Metal Exchange (LME) dropped 1 percent at $7,743 a tonne, flinging the metal to a fifth consecutive weekly loss.
Analysts observed that prices of the metal used widely in the power and construction industries have declined nearly 30 percent since hitting a record high of $10,845 a tonne in March 2022.
According to a market dealer, Covid outbreaks in China, the dollar and a growth slowdown in the rest of the world will keep base metals, including copper, under pressure, as there is little appetite from funds to “go long”, betting on higher prices.
Analysts at American multinational investment management firm, Morgan Stanley, explained that investors remain alert to domestic Covid-19 flare-ups in China as the economy is still at an early stage of a bumpy recovery trajectory.
Also weighing on the valuation of base metals was the Chinese central bank’s biggest cash withdrawal from the financial system in three months, suggesting a gradual exit from crisis-mode monetary easing delivered during Covid lockdowns.
Asides copper, other base metals edged lower as zinc shed 1 percent at $3,077 a tonne, aluminium was down 0.8 percent at $2,422 a tonne, lead slipped 1.5 percent to $1,942 a tonne, tin lost 3.4 percent at $25,100 a tonne, and nickel ceded 0.6 percent at $21,395 a tonne.
