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Copper falls on fears about Chinese demand and imminent rate hike

Copper falls on fears about Chinese demand and imminent rate hike

Copper falls on fears about Chinese demand and imminent rate hike

Copper prices fell on Monday, weighed down by lingering concerns about the economy in China, the world’s top consumer of metals, as the market grapples with COVID-19 and uncertainty about rising US interest rates.

Three-month copper on the London Metal Exchange (LME) was down 1.2% at $8,451 a tonne at 10:45 GMT, after hitting its highest level in almost six months on Friday.

Symptoms of the coronavirus are spreading rapidly in China after authorities began rolling back strict anti-disease measures, fueling fears that a surge of infections could put pressure on its fragile health system and cripple businesses.

We can see that China is in a really poor state right now in terms of its economy. Things are turning from a pretty low level, so it’s a question of whether prices reflect where we are right now.” said Dan Smith of Amalgamated Metals Trading. “We think we are going to go lower in base metals in the next few weeks because of these issues in China.”.

Many metal producers decided to maintain COVID-19 measures in their factories to minimize infections and their impact on production.

The most traded January copper contract on the Shanghai Futures Exchange fell 1.2% to 66,030 yuan ($9,469.65) a tonne.

Also weighing on sentiment was uncertainty about whether the Federal Reserve will ease the pace of rate hikes this week. The European Central Bank and the Bank of England will also announce rate hikes during the week.

Among other base metals, aluminum on the LME was down 1.2% at $2,451 a tonne; Nickel was down 0.4% at $29,325; Lead was down 0.4% at $2,190; tin was down 0.5%, at US$24,175; and zinc added 0.1% to US$3,243.

With information from Reuters

Source: Elcomercio

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