Industrial metals prices fell on Monday on concerns about demand in China due to weak economic data and a firmer dollar, but interest rate cuts by the country’s central bank provided support.
Benchmark copper on the London Metal Exchange fell 2.7% to $7,870 a tonne in official rings, down 4% from a six-week high of $8,214 hit on Friday.
“The Chinese data was disappointing, suggesting a bigger-than-expected hit from the COVID restrictions,” a metals trader said, adding that a higher dollar had also prompted fund selling.
“But there is one positive: PBOC (People’s Bank of China) interest rate cuts.”
China’s economy unexpectedly slowed in July, with growth in industrial production, fixed asset investment, total social financing and new yuan lending.
Meanwhile, Chinese property developers cut investment sharply in July, while new construction starts suffered their biggest drop in nearly a decade.
However, China’s central bank unexpectedly cut interest rates for the second time this year on Monday in a bid to revive demand for credit to support growth.
The rise in the US currency made the dollar-priced metals more expensive for traders of other currencies, while manufacturing concerns due to concerns over the supply of microchips from the major producer from Taiwan increased negative sentiment.
“Just remember, from your humble toaster to your car, there are microchips at work,” said Malcolm Freeman, CEO of Kingdom Futures.
US House Speaker Nancy Pelosi’s visit to Taiwan earlier this month has raised tensions between China and the United States.
Part of China’s response involved its military surrounding the self-ruled island in what Taiwan said amounted to a “blockade”.
Aluminum prices also came under pressure from record Chinese output in July as smelters rose after energy restrictions eased.
Aluminum prices fell 2.1% to $2,383 a tonne, zinc fell 1.6% to $3,530, lead was down 1% to $2,162, tin was down a 3.9% to $24,200 and nickel lost 5.1% to $21,850.
(This story has not been edited by Business Standard staff and is automatically generated from a syndicated feed.)
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