Copper prices fall as power shortages grips China

Copper prices were trading lower for a second day on Wednesday amid an energy supply crisis in China, the largest consumer of metals at the level, which has led to the closure of factories and calls into question the outlook for demand.

At 1058 GMT, three-month copper on the London Metal Exchange (LME) was down 0.5% to $ 9,221 a tonne after falling 1% on Tuesday.

Chinese stocks fell and the yuan weakened, while Goldman Sachs and Nomura revised downward projections for China’s economic growth this year.

Outside of China, questions are also emerging about the global recovery as central banks prepare to reduce stimulus and the US government reels into a funding crisis.

China is the largest consumer and producer of metals, and it is unclear whether the power shortage will have a greater impact on supply or demand, independent analyst Robin Bhar said.

“In this uncertain environment, the path of least resistance (for prices) appears to be to the downside“, he claimed.

Prices for the red metal, used in energy and construction, peaked at US $ 10,747.50 in May and many analysts expect higher gains as the world embraces electrification.

The dollar reached its strongest level against a basket of major currencies in nearly a year, making raw materials more expensive for holders of other currencies.