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Copper extends sell-off as robust dollar, recession fears choke demand


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Copper prices slumped to their lowest

levels since November 2020 on Wednesday, weighed down by a

strong U.S. dollar and threats to demand from heightened fears

of a global recession and renewed lockdowns in top consumer

China.

Three-month copper on the London Metal Exchange

dropped as much as 4.9% to $7,291.50 a tonne and was down 1.5%

at $7,557.50 as of 0702 GMT.

The most-traded August copper contract in Shanghai

ended daytime trading down 5.4% to 57,620 yuan ($8,595.38) a

tonne.

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The dollar stood tall near a 20-year peak against the euro,

making metals priced in the U.S. currency more expensive for

other currency holders.

“The base metals complex remains pressured by macro

headwinds stemming from China’s COVID lockdowns and the impact

of monetary policy tightening and slowing global growth on

demand,” Standard Chartered said in a note.

Adding to growth worries, business growth across the euro

zone slowed further last month, according to a survey in which

forward-looking indicators suggested the region could slip into

decline this quarter.

In 2022, supply side may exceed demand in base metal

complex. Investors are refraining to take large positions in

this market as recession fears mount, said Vandana Bharti,

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assistant vice-president of commodity research at SMC Comtrade.

COVID: China is fighting COVID-19 flare-ups on multiple

fronts across the country including an emerging cluster in

Shanghai, spurring mass testing drives and fresh restrictions.

INTEREST RATES: Central banks around the world are raising

interest rates sharply to rein in soaring inflation, restraining

economic growth.

MARKETS: Asian stocks slipped as investors’ fears deepened

that the continent is leading the world into recession.

DATA: German industrial orders grew slightly in May after

three consecutive months of decline due to the war in Ukraine,

data showed on Wednesday.

OTHER METALS: LME aluminum was down 0.1% at

$2,389.50 a tonne, zinc gained 1% to $3,019, lead

rose 0.5% to $1,948, nickel fell 1.2% to

$22,370, and tin dipped 3% to $25,230.

Shanghai aluminum lost 2.5%, zinc fell

1.1%, nickel slipped 1.2%, lead eased 0.4%,

and tin shed 5.3%.

($1 = 6.7053 Chinese yuan)

(Reporting by Brijesh Patel in Bengaluru

Editing by Tomasz Janowski)



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