Copper and aluminium futures tumbled along with other industrial commodities on concerns that virus lockdowns in China will hurt demand and as supply constraints in the Asian powerhouse eased.
Beijing’s ongoing battle to contain virus outbreaks is damaging confidence in the nation’s economy, with the Covid Zero policy causing many US companies to delay or cancel investments. That’s on top of a property crisis that’s taken a hefty toll on metals demand in the top consumer.
Prices of copper, seen as a bellwether for economic growth, have wavered in recent weeks after recovering from a 20-month low in July as traders weigh supply constraints against a darkening outlook for demand. Outside China, Europe’s energy crisis is set to undercut consumption, while higher US Federal Reserve interest rates are pressuring non-yielding assets like metals.
Predictably, China is having just as much difficulty containing the new more transmissible strains of COVID-19 as everywhere else. There are lockdowns in place in every Chinese province at present. Meanwhile the Communist Party Congress is now slated for mid-October. Between now and then we can expect much tighter controls on movement which will have a knock-on effect on the wider economy.Click HERE to subscribe to Fuller Treacy Money Back to top