The copper price fell on Monday as China’s covid outbreak worsened and a series of stunning street protests in cities across the nation threaten to derail economic activity.
Copper for delivery in March fell 0.9% on the Comex market in New York, touching $3.59 per pound ($7,898 per tonne).
[Click here for an interactive chart of copper prices]
The immediate cause of the Chinese public’s anger is the government’s restrictive policies to contain covid, which have been blamed for contributing to a deadly fire in Xinjiang last week. Beijing could respond by further loosening controls — which it has already signaled is its long-term plan — or clamping down even more tightly as it seeks to quell social unrest.
A return to stricter lockdowns would further squeeze demand for a number of key commodities.
“The covid situation in China continues to weigh on metal markets, with record cases again announced over the weekend, together with the widely reported protests,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said in an emailed note.
“We expect the renewed lockdowns to hurt market confidence into year-end, and thus delay some raw materials purchases over the coming month.”
Fears over China’s worsening virus situation and the government’s curbs have overshadowed the impact of Beijing’s latest stimulus measures — a cut in the cash buffers that banks are required to hold — enacted Friday, according to a note from Shanghai Metals Market.
Sales at manufacturers are falling just as tighter covid controls hit the real economy and copper consumption, it said.
(With files from Bloomberg)