Copper widens losses on China real estate and growth fears

Copper prices were down on Wednesday due to fears that China’s troubled real estate sector would further slow growth in the world’s second largest economy and demand for metals.

At 1030 GMT, three-month copper on the London Metal Exchange (LME) was down 1.6% to $ 9,025 a tonne after losing 0.9% the day before.

Volatility increased due to the expiration of LME options on Wednesday and low volumes due to China’s absence from the market due to a holiday that runs from October 1-7, a trader said.

Construction is one of the main drivers of copper demand and other Chinese real estate companies have been hit by their bonds due to uncertainty surrounding China Evergrande’s debt problems.

“That (Evergrande) problem is affecting the market because it will likely impact construction and industrial activities from a trust perspective.”Said Xiao Fu, Head of Commodity Market Strategy at Bank of China International.

“Confidence drag and energy constraints are likely to slow growth, but we do not expect a crash scenario, but slower growth in the coming months“Said the expert.

While sentiment has taken a hit, actual base metal consumption in construction will still continue due to the large number of housing projects underway, albeit at a slower pace, Fu added.

“The projects that Evergrande started will likely be completed, although it may take longer, and in the late stage of construction, base metals are used more”, He specified.