Copper price retreats as China’s covid woes dampen demand prospects

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Benchmark London copper retreated on Friday and was on track for a fifth straight weekly loss on worries that fresh covid-19 restrictions could slow the pace of infrastructure projects and dampen demand for metals.

Three-month copper on the London Metal Exchange (LME) fell 1.7% to $7,690 a tonne by 0722 GMT.

On the Shanghai Futures Exchange, the most-traded August copper contract ended daytime trading 1.3% up at 58,960 yuan ($8,793.96) a tonne, off a session high of 60,540 yuan.

Copper rose sharply on Thursday after a Bloomberg News report saying that China was considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of the year to boost infrastructure funding.

Sources had told Reuters on July 5 that China, the world’s top metals consumer, would issue an advance quota for 2023 special local government bonds this year, with the new quota likely to exceed the 1.46 trillion yuan for 2022.

“While Chinese policymakers are considering boosting stimulus, the headwind from covid-19 restrictions remain, given China is still running a zero-covid policy,” said National Australia Bank economist Tapas Strickland.

LME copper is down more than 3% this week as heightened concerns over a potential global recession dampening metals demand also weighed on markets.

 ($1 = 6.7046 Chinese yuan)

(By Enrico Dela Cruz; Editing by David Goodman)

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