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Most base metal prices fell on Thursday, with aluminium dropping to a three-week low, as COVID-19 restrictions in top consumer China and prospects of bigger U.S. rate hikes fuelled worries about a slowdown in global economic growth.
The most-traded May aluminium contract on the Shanghai Futures Exchange SAFcv1 ended daytime trading down 3.5% to 21,815 yuan ($3,429.98) a tonne, while copper SCFcv1 eased 0.4% to 73,410 yuan ($11,542.27) a tonne.
ShFE nickel SNIcv1 fell 2.7%, zinc SZNcv1 was down 0.5%, lead SPBcv1 slipped 0.5% and tin SSNcv1 declined 1.5%.
In London, LME aluminium CMAL3 was down 1.3% at $3,394 a tonne as of 0740 GMT, copper CMCU3 fell 0.4% to $10,262 and lead CMPB3 was steady at $2,413.
LME zinc CMZN3 fell 0.9% to $4,236 a tonne, nickel CMNI3 slipped 1.3% to $33,020 and tin CMSN3 was 0.4% lower at $43,680.
“The move lower in Shanghai aluminium prices may be as simple as the global market digesting the prospect of a more aggressive Federal Reserve response,” said Thomas Westwater, an analyst at DailyFX.
“Given already high prices and renewed growth concerns around central bank tightening, I’d say we could expect volatility to continue. Speculators may see this as a time to take some profits and reposition.”
Shanghai on Wednesday made concessions on an unpopular COVID isolation policy that has separated children from their parents and sparked a public outcry, but extended a citywide lockdown that has left some residents struggling to buy food.
The dollar held near a two-year high on hawkish comments from Fed officials, making greenback-denominated metals more expensive to buyers using other currencies.
“Meanwhile, the stockpiling of billet and other downstream products have significantly increased due to the logistics bottleneck due to the COVID outbreak (in China),” said Xinlin Chen, senior consultant at Wood Mackenzie.
“In a nutshell, the increasing aluminium supply along with the restricted demand depressed market expectation.”
Trading inventories of the metal, used widely in construction, transportation and consumer goods, SMM-ALU-CON, rose to 1.05 million tonnes in China.
Russian aluminium giant Rusal, whose global operations have been hobbled by the war in Ukraine, has exported its first bauxite shipment from its mines in Guinea in nearly a month, an analysis of shipping data showed.
TIN: Indonesia’s refined tin exports in March stood at 6,674.91 tonnes, up 10.45% from a year earlier, trade ministry data showed.