The copper price fell on Wednesday as worries about demand in China were reinforced by the firmer US dollar.
Copper for delivery in December fell 3% from Tuesday’s settlement price, touching $3.44 per pound ($7,568 per tonne).
[Click here for an interactive chart of copper prices]
China’s factory activity contracted for the second straight month in August as covid-19 infections, the worst heatwave in decades, and an embattled property sector weighed on production, suggesting the economy is struggling to sustain momentum.
“We don’t see a big push in terms of China fostering metals demand. We expect the government in China to work towards stabilization, we don’t expect a big stimulus,” said Julius Baer analyst Carsten Menke.
“For property, it’s about avoiding a crash. On the infrastructure side, there is a realization that it will be hard to move the needle because the base is already so big.”
Also weighing on industrial metals is the dollar, trading near two-decade highs against other major currencies after hawkish Federal Reserve comments bolstered expectations of further aggressive hikes in US interest rates.
Meanwhile, copper output in Chile, the world’s largest producer of the metal, fell 8.6% year on year to 430,028 tonnes in July.
Manufacturing output in the Andean country fell 5.1% in the month.
(With files from Reuters)