Industrial metals prices fell on Monday on concerns about demand in China due to weak economic data and a firmer dollar, but interest rate cuts by the country’s central bank provided support.
Benchmark copper on the London Metal Exchange fell 2.7% to $7,870 a tonne in official rings, down 4% from a six-week high of $8,214 hit on Friday.
“The Chinese data was disappointing, suggesting a bigger-than-expected hit from the COVID restrictions,” a metals trader said, adding that a higher dollar had also prompted fund selling.
“But there is one positive: PBOC (People’s Bank of China) interest rate cuts.”
China’s economy unexpectedly slowed in July, with growth in industrial output, fixed asset investment, total social financing and new yuan lending.
Meanwhile, Chinese property developers cut investment sharply in July, while new construction starts suffered the biggest drop in nearly a decade.
However, China’s central bank unexpectedly cut interest rates for the second time this year on Monday in an attempt to revive demand for credit to support growth.
A surge in the U.S. currency that made dollar-priced metals more expensive for traders of other currencies weighed, while manufacturing worries over microchip supply concerns from Taiwan’s major producer added to the negative sentiment.
“Just remember, from your humble toaster to your car, there are microchips at work,” said Malcolm Freeman, CEO of Kingdom Futures.
US House Speaker Nancy Pelosi’s visit to Taiwan earlier this month has raised tensions between China and the United States.
Part of China’s response involved its military surrounding the self-ruled island in what Taiwan said amounted to a practice “blockade.”
Aluminum prices also came under pressure from record Chinese output in July as smelters rose after energy restrictions eased.
Aluminum prices fell 2.1% to $2,383 a tonne, zinc fell 1.6% to $3,530, lead fell 1% to $2,162, tin fell 3.9% to $24,200 and nickel lost 5.1% to $21,850.
(This story has not been edited by Business Standard staff and is automatically generated from a syndicated feed.)
Business Standard has always gone to great lengths to provide up-to-date information and commentary on developments that matter to you and have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only made our determination and commitment to these ideals stronger. Even during these challenging times resulting from Covid-19, we remain committed to keeping you informed and up-to-date with credible news, authoritative opinion and incisive commentary on relevant topical issues.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more so we can continue to bring you more quality content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve our goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we’re committed to.
Support quality journalism and subscribe to Business Standard.
Last weekend, I wrote about Warren Mosler's argument that the Fed's rate hikes could be…
Last weekend, I he wrote on Warren Mosler's argument that the Fed's rate hikes could…
Last week, the chairman of the Fed, Jerome Powell said, "the disinflationary process has begun".…
Earlier this week, I joined Romaine Bostick and Scarlet Fu Bloomberg TV. The Congressional Budget…
Tomorrow morning, I'll be joining CNBC's Squawk Box to talk about a new effort tax…
Former Vice President Mike Pence talks about privatizing Social Security. The remarks came Thursday before…