Copper falls on weak demand expectations
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By Pratima Desai
3 October (Reuters) – Copper prices fell on Monday as expectations of weaker demand were bolstered by global production data, a strong dollar and rising inventories in London Metal Exchange (LME) permitted stockpiles.
* Benchmark copper on the LME fell 1.5% to $7,434 a tonne by 09:30 GMT in subdued trading due to a week-long holiday in top consumer China. Last week, the benchmark three-month contract hit $7,220 a ton, its lowest since July 21.
* “It’s clear that we’re going to have lower demand and potentially lower prices in the second half of this year,” said Michael Widmer, an analyst at Bank of America.
* “The uncertainty is how severe the slowdown will be and the full impact it will have on base metals demand.”
* Chinese factory activity shrank faster in September as strict COVID lockdowns halted production and hit demand for Chinese goods.
* Manufacturing activity in the Eurozone and Asia weakened in September due to ongoing cost pressures.
* “The European winter will be another important turning point,” said Edward Meir, analyst at ED&F Man Capital Markets.
* “However, we believe that barring a severe winter, things in Europe will not be as bad as expected as an impressive amount of energy planning and preparation (and saving) has been undertaken.”
* The stronger US currency, which makes dollar-valued commodities more expensive for holders of other currencies, has weighed on base metals for some time. [FRX/]
* Copper inventories in LME warehouses rose more than 30% to 135,750t from September, while collateral written off (metal scheduled for delivery) fell 50% to 6% on the 26th August.
* Among other metals, aluminum fell 0.7% to $2,146 a tonne, zinc 0.9% to $2,941, lead 2.4% to $1,862, tin 3.2% to $19,965 and nickel down 2 .8% to $21,705.
(Reporting by Pratima Desai; Editing in Spanish by Juana Casas)