Base metals fall as China’s COVID curbs spike demand worries

Copper and other industrial metal prices fell on Friday, hit by demand worries in top consumer China amid rising coronavirus cases and expanding restrictions.

Chinese cities from Wuhan in central China to Xining in the northwest are doubling down on COVID-19 curbs, sealing up buildings, locking down districts and throwing millions into distress in a scramble to halt widening outbreaks.

Three-month copper on the London Metal Exchange declined 1.9% to $7,617.50 a tonne by 0744 GMT, and the most-traded December copper contract on the Shanghai Futures Exchange fell 1% to 62,830 yuan ($8,672.07) a tonne.

“We have seen COVID-zero policies drowning out positivity from the onshore equities market on Wednesday, and it looks like without equities pricing risk-on, a systematic selling has emerged,” Marex‘s analyst Zenon Ho said in a note.

China stocks fell, as COVID-19 flare-ups added to concerns of a dim economic outlook, amid fears that growth will be sacrificed for ideology-driven policies under President Xi Jinping’s new leadership team.

LME aluminium fell 1.5% to $2,252.50 a tonne, tin dropped 3.3% to $18,080 a tonne, zinc tumbled 2.4% to $2,871 a tonne and lead eased 0.4% to $1,858 a tonne.

SHFE aluminium shed 2.5% to 18,215 yuan a tonne, nickel declined 1.8% to 184,710 yuan a tonne, tin dropped 4.4% to 158,930 yuan a tonne and zinc fell 2.7% to 23,500 yuan a tonne.

Production cuts in Europe because of the energy crisis and low inventories have sustained zinc prices over the last year, but headwinds emanating from growth and demand slowdown are now a bigger challenge for the market.

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