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Copper falls as US-China tension pushes investors to safer assets

2022-08-02 16:41:47

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Copper edged lower on Tuesday alongside global equities as tensions between China and the United States and a run of weak economic data pushed investors to safer assets.

Benchmark copper on the London Metal Exchange (LME) was down 0.1% at $7,815 a tonne at 1626 GMT, having fallen as low as $7,665.

Prices of the metal used in power and construction have risen from a 20-month low of $6,955 on July 15, but are down 20% this year due to a global economic downturn.

US House of Representatives Speaker Nancy Pelosi on Tuesday arrived in Taiwan, a territory China claims. China threatened repercussions and said its military would launch “targeted military operations.”

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Chinese stock markets saw their biggest fall in more than two months, European and US equities fell and the dollar strengthened.

A bearish mood had already spread on Monday as economic data from the United States, Europe and Asia showed slowing manufacturing and broader economic growth.

Copper should be supported by limited supply and upcoming stimulus in China, the biggest metals consumer, said WisdomTree analyst Nitesh Shah.

“Towards the end of this year we could start to see pretty strong rallies in base metals,” he said.

Zinc prices on the LME were down 0.4% at $3,316.50 a tonne as signs of supply tightness intensified.

On-warrant zinc inventories in LME-registered warehouses have fallen to 26,650 tonnes from around 140,000 tonnes at the start of the year.

That has helped push the premium traders pay for quickly delivered cash zinc over the three-month contract as high as $113.50 a tonne from around $45 a month ago.

Zinc prices are down around 5% this year.

In other metals, LME aluminum was down 0.6% at $2,417 a tonne, nickel fell 4.4% to $22,545, lead slipped 0.4% to $2,045 and tin was down 2.9% at $24,170. (Reporting by Peter Hobson; Additional reporting by Mai Nguyen in Hanoi; Editing by Jan Harvey, Kirsten Donovan and Bernadette Baum)



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Written by Jitendra Singh

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