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Copper prices extended losses on Wednesday as soaring inflation and the prospect of more interest rate hikes fuelled worries about the global economy and metals demand, while a strong dollar also weighed on the market.
Three-month copper on the London Metal Exchange CMCU3 had given up 0.9% to $7,356 a tonne by 1015 GMT after dropping 1.9% on Tuesday.
Data showed on Wednesday that British inflation hit a 40-year peak, while a U.S. Federal Reserve official on Tuesday talked about the need for further rate hikes to contain inflation.
“What we are looking at is an environment where recession is imminent, but has not landed. We keep talking about recession and yet there is no recession,” said Naeem Aslam, chief market analyst at Ava Trade.
“That’s adversely influencing sentiment and industrial metals are not going to perform well in that climate.”
The most-traded November copper contract on the Shanghai Futures Exchange SCFcv1 declined 1.1% to 62,120 yuan ($8,601.85) per tonne.
Also dampening sentiment was a firmer dollar index =USD, which makes metals priced in the U.S. currency more expensive for buyers using other currencies. FRX/
LME aluminium CMAL3 shed 0.9% to $2,173 per tonne after more inflows of aluminium into LME approved warehouses.
Data on Wednesday showed arrivals of 82,825 tonnes, bringing the surge in LME aluminium inventories so far this month to 70%. MALSTX-TOTAL
Commodity trader Glencore has delivered significant amounts of Russian-origin aluminium to LME-registered warehouses in Gwangyang, South Korea, two sources with direct knowledge of the matter said on Tuesday.
Among other metals, nickel CMNI3 dipped 0.1% to $21,850 a tonne and lead CMPB3 eased 1.4% to $1,984.50, but zinc CMZN3 added 0.1% to $2,866 and tin CMSN3 rose 0.2% to $19,480 after Indonesian authorities said on Wednesday they are preparing for a potential ban on tin exports.