Demand headwinds weigh on prices of industrial metals

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LONDON — Industrial metal prices fell on

Thursday after the U.S. Federal Reserve hiked interest rates and

weak economic data from top consumer China highlighted the

deteriorating outlook for demand.

Benchmark copper on the London Metal Exchange traded

down 1.4% at $9,100 a tonne in official rings, while three-month

aluminum fell 2.6% to $2,524.

“Metals demand is at risk as accelerated monetary policy

tightening led by developed economies threatens to hamstring

economic growth and trigger a possible recession,” said Tom

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Mulqueen, analyst at Amalgamated Metal Trading.

“Soaring inflation also threatens to curb consumer goods

spending as the rising cost of living hits disposable income and


U.S.: The Fed hiked interest rates 75 basis points on

Wednesday, the largest increase since 1994, to rein in soaring

inflation. The U.S. central bank expects to raise interest rates

steadily for the rest of 2022.

The European Central Bank last week signaled a string of

rate hikes from July, while the Bank of England raised rates 25

basis points to 1.25% on Thursday.

DATA: China’s new home prices fell for the second month this

year, depressed by still fragile demand as widespread COVID-19

curbs dented already weak buyer confidence.

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“A China demand rebound from second quarter COVID-19

lockdowns could offer some respite, but is vulnerable to the

ongoing threat of new outbreaks and restrictions under China’s

zero-COVID approach,” Mulqueen said.

DOLLAR: Higher U.S. rates have boosted the U.S. currency,

which when it rises makes dollar-priced commodities more

expensive for holders of other currencies.

INVENTORIES: Low stocks in LME approved warehouses are

providing some support for industrial metals.

Aluminum stocks are at 21-year lows of

411,575, copper stocks are at 121,000 are near

two-year lows, zinc stocks at 79,575 are at their

lowest since April 2020 and lead stocks at 38,825

tonnes are at 2007 lows.

PRICES: Zinc was down 1.8% at $3,577 a tonne, lead

gained 0.1% to $2,080, tin ceded 0.5% to $32,290

and nickel fell 1.1% to $25,575.

(Reporting by Pratima Desai; additional reporting by Brijesh

Patel in Bengaluru; Editing by Amy Caren Daniel)

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