BY ONOME AMUGE
Copper wallowed in negative territory despite seeing little gains at the closing session of the week, following a more than seven-month low the previous day, as worries over a global economic slowdown dampened demand, leaving the red metal stuck in its sixth consecutive weekly decline.
Benchmark three-month copper on the London Metal Exchange (LME) was flat at $9,095 a tonne, after falling below $9,000 at $8,938, its lowest since October 2021. The contract also declined 3.4 percent in the week, while analysts at global financial services corporation, Citi, projected that copper prices are likely to decline to $8,500 a tonne within the next three months.
Also, the most-active June copper contract on the Shanghai Futures Exchange (ShFE) was down 0.5 percent at 71,060 yuan or $10,445.39 a tonne.
So far, copper, which is used in power and construction sectors and widely seen as a barometer of global economic growth, has declined over 16 percent from March’s record high of $10,845, when investors traded cautiously over fears that the war in Ukraine would disrupt its supply from Russia.
Other industrial metals also dipped in valuation as traders worried that a slowing global economy would require less metal, thereby dwindling demand.
Fitch Solutions said in its remark about the current trend in the metals market that metal prices have collapsed back to pre-conflict levels, with some easing to 2021 levels as a strong U.S. dollar, Chinese lockdowns and weakening Chinese demand are working to undo most gains.
“We expect some more price weakening in Q2 2022 before a stabilisation in the second half of the year, as Chinese lockdowns roll on,” it noted.
On his part, Daniel Briesemann, analyst at Commerzbank, stated that demand hopes have given way to demand concerns, adding that Covid lockdowns in China, the top metals consumer, the war in Ukraine and aggressive interest rate rises had all combined in denting the outlook for metals demand as well as the economy.
The week ended on a bearish note for most base metals as nickel lost 0.9 percent to $27,555 a tonne, lead eased 0.5 percent to $2,082 a tonne and tin was down 0.1 per cent at $33,730 a tonne.
In contrast, aluminium gained 1.5 percent to $2,782 a tonne, while zinc was up 0.3 percent to $3,540.50 a tonne.
