Ningbo Jintian Copper (Group) Co., Ltd.
Ningbo Jintian Copper (Group) Co., Ltd.

METALS-Copper hits 17-month lows on China restrictions, manufacturing data

LONDON, July 4 (Reuters) - Copper prices fell to 17-months lows on Monday as new COVID restrictions in top consumer China, slowing global manufacturing activity and a jump in inventories sparked demand worries and a sell-off.

Benchmark copper on the London Metal Exchange (LME) was down a touch at $8,044 a tonne at 1040 GMT.

Prices of the metal used in power and construction earlier fell to $7,918, its lowest since February 2021.

"Copper pipe manufacturers in china have had an awful time. People are fearful of inflation and recession, but the probability of recession is less than 50%," said Dan Smith, managing director at Commodity Market Analytics.

"The market needs to find a floor, but industrial metals are starting to look like good value."

COVID: Cities in eastern China tightened COVID-19 curbs on Sunday as coronavirus clusters emerged, posing a new threat to the country's economic recovery under the government's strict zero-COVID policy.

ACTIVITY: Global manufacturing struggled in June as higher prices and a darker economic outlook left consumers wary of making purchases, while Russia's invasion of Ukraine added to supply chain disruptions, surveys showed.

INVENTORIES: Copper stocks in LME approved warehouses jumped 10,100 tonnes to 136,950 tonnes. They have risen more than 20% over the past week.

INFLATION: Hitting economic activity is soaring inflation and interest rate rises in many countries including the United States where the Federal Reserve is expected to deliver another 75-basis-point rate hike this month.

POSITIONING: Marex Analytics estimates that short copper positions -- bets on lower prices -- are as large as they were in 2015 when economic growth in China slowed to a 25-year low.

At close of business June 30, the copper short was 1.5 million or 43.6% of open interest compared to the peak of 3.1 million tonnes and 72.2% in 2015 and up from about one million tonnes and 29.8% on June 23, Marex said.

OTHER METALS: Aluminium was up 0.5% to $2,457, zinc gained 2.6% to $3,109, lead slipped 0.7% to $1,920, tin added 0.9% to $26,900 and nickel climbed 4.3% to $22,770 a tonne.

(Reporting by Pratima Desai; additional reporting by Brijesh Patel in Bengaluru; editing by Jason Neely) (( (( For related news and prices, click on the codes in brackets: LME price overview

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