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Copper headed for a third straight weekly loss — tracking a broad slide in global risk assets — as concerns about China’s economy and widening housing crisis put markets in bearish mood.
[Click here for an interactive chart of copper prices]
The metal steadied on the London Metals Exchange on Friday. Pessimism over China’s growth prospects is building after the country’s state-owned property developers warned of widespread losses, fueling concerns turmoil is spreading from the private sector.
The Chinese real estate sector is a globally significant source of metals consumption and a crucial driver of the country’s economy. A gauge of major LME contracts is near its lowest since May as the gloom over the demand outlook intensifies.
While the country’s economic rebound following a year of lockdowns to curb coronavirus has already disappointed metals bulls, worse may be yet to come. Property woes have led to a cash crunch for shadow banking giant Zhongzhi Enterprise Group Co., further undermining risk appetite.
Chinese authorities are stepping up efforts to bolster financial markets and the yuan. The People’s Bank of China delivered a surprise interest rate cut this week, the biggest reduction since 2020, and its most forceful yuan fixing guidance ever on Friday.
The recent slide in the Chinese currency has eroded the buying power of local commodities importers, and blunted the impact of lower metals prices. Recent actions by the authorities have helped it consolidate.
Copper futures nudged down to trade at $8,225.50 a ton on the LME by 3:40 p.m. local time. Zinc fell 0.5% and aluminum slipped. All metals except for lead were heading for weekly losses.
(By Eddie Spence)
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