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Copper prices headed for a third consecutive weekly decline on Friday amid lacklustre demand in China, rising inventories and expectations of weak growth in the United States and elsewhere.
Benchmark copper CMCU3 on the London Metal Exchange (LME) was up 0.1% at $8,498 a tonne at 1043 GMT, but down 1.1% for the week.
The metal used in electrical wiring has fallen 11% from a high of $9,550.50 in January and many analysts expect further losses before supply shortages lift prices again.
Pressuring copper are a weaker than expected demand recovery in China, where services expanded but manufacturing contracted in April, and fast-rising interest rates in the United States and other countries that have caused a string of U.S. bank failures.
The U.S. Federal Reserve is “hitting the brakes like we’ve never seen before”, said Bjarne Schieldrop, chief commodities analyst at Swedish banking group SEB.
Higher rates are now rippling through to the wider economy, he said. “There should be a further slow down and weakness in copper prices … the outlook for copper is probably very bright in the coming years but maybe not in the coming half year.”
Meanwhile, data on Friday showed that German industrial orders fell significantly more than expected in March.
Satellite surveillance of metal processing plants showed on Friday that global copper smelting activity slid in April to its lowest in two years.
But while copper inventories in Shanghai Futures Exchange warehouses fell slightly in the week to Friday, inventories in Chinese bonded warehouses are rising and on-warrant LME stocks have doubled since early April to 69,400 tonnes, the most in nearly four months. CU-STX-SGH, SMM-CUR-BON, MCUSTX-TOTAL
In other metals, LME aluminium CMAL3 was down 0.2% at $2,282 a tonne, zinc CMZN3 rose 0.7% to $2,641, nickel CMNI3 fell 0.5% to $23,880, lead CMPB3 was up 0.5% at $2,111.50 and tin CMSN3 gained 0.8% to $25,815.
All were headed for weekly losses.