LONDON – Aluminium prices hit their lowest in nearly six months on Friday and copper also dropped as investors fretted over the prospect of weak economic growth hitting metals demand after renewed COVID-19 lockdowns in China and increases to interest rates. Three-month aluminium on the London Metal Exchange (LME) slid 3% to $2,677 a tonne by 1600 GMT, the lowest since December last year.
“Price pressure is due to uncertainty on growth prospects, weaker demand from the auto sector as well as the ongoing recovery in China’s domestic output,” analyst Sudakshina Unnikrishnan at Standard Chartered Bank said in a note this week.
LME copper fell 1.8% to $9,447 a tonne after dropping 1.2% in the previous session, while Comex futures dropped 2.1% to $4.29 a lb.
“Copper is coming under several sorts of pressure. The lockdowns aren’t ending as quickly as hoped and China’s zero-COVID policy is very damaging for economic growth,” said Nitesh Shah, commodity strategist at exchange-traded fund provider WisdomTree. “You’ve also got central banks in other parts of the world maintaining a very hawkish tilt and that puts into question whether economic growth outside of China is going to decelerate faster.”
China’s Shanghai commercial hub will lock down millions of people for mass COVID-19 testing this weekend, only 10 days after lifting its gruelling two-month lockdown. Other risky assets also fell, with equities hitting a two-week low as the European Central Bank interest rate outlook and higher-than-expected U.S. consumer price data for May stoked concerns over global growth.