BY ONOME AMUGE
Copper plunged to a fourth consecutive weekly decline, as soaring inflation figures and weak economic data on a global scale lowered investors’ demand for the red metal.
Three-month copper on the London Metal Exchange (LME) slipped 1.3 percent to $8,153 a tonne.
The metal also recorded its worst quarter since 2011 in the three months ended June, losing 20.4 percent. It was also down nearly 2.7 percent for the week.
On the Shanghai Futures Exchange (ShFE), the most-traded August copper contract declined 2.8 percent at 62,420 yuan or $9,314.61 a tonne.
Commodity analysts at ANZ, in an assessment of the market, said the economic bellwether weakened in terms of demand amid concerns of an economic slowdown, adding that not even an increase in factory activity in biggest consumer China could improve the mood.
“This suggests the market views the improvement is not enough to offset the potential slowdown in developed economies,” they added.
“Recession fears are the dominating factor right now, that’s taking casualties right, left and centre. Every time there’s an indication of more hawkish policy, markets fall further,” Nitesh Shah, commodity analyst at WisdomTree, remarked.
Meanwhile, copper output in Chile, the world’s largest producer of the metal, declined 2.7 percent year-on-year to 480,275 tonnes in May, reflecting a decreasing supply.
Other base metals also edged lower as LME aluminium shed 1.9 percent to $2,399 a tonne, down 2.4 percent for the week to its sixth consecutive weekly fall.
zinc was down 3.5 percent to $3,045.50 a tonne, nickel dropped 2.4 percent to $22,150 a tonne, tin eased 4 percent to $25,400 a tonne. Lead, however, gained 0.9 percent to $1,924.50 a tonne.
Though the Chinese Purchasing Managers Index (PMI) data showed that manufacturing activity rose to a 13-month high in June, market participants assert that the indicator reflects the lifting of Covid-19 lockdown restrictions rather than an economic revival.
Analysts at London-based independent economic research consultancy, Capital Economics, observed that it is increasingly clear that concerns about demand are taking precedence of supply issues in the metals market.
They noted that the prices of all the base metals declined by over 20 percent in the second quarter, despite the “still high” energy prices which raise the cost of metals production.
“We think that prices have further to fall in the second half of the year, but we suspect that the big falls are now behind us,” they said.