London copper, aluminum sink to 3-month lows on demand concerns


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Copper and aluminum prices in London fell to their lowest level in three months on Tuesday, as COVID-19 restrictions in China, the largest consumer, and the prospect of aggressive rate hikes in the United States fueled concerns about weaker global growth affecting demand for metals.

Benchmark three-month copper on the London Metal Exchange (LME) fell 1.7% to $9,608.50 a tonne, at 0737 GMT, after hitting its lowest since January 31 earlier in the session.

LME aluminum fell 0.9% to $3,024.50 a tonne, after hitting its lowest level since Feb. 3. Zinc lost 2.1% to $4,021, while lead rose 0.5% to $2,271.50 and tin gained 0.6% to $40,495.

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The Shanghai Futures Exchange is closed for a public holiday.

“The Fed is about to embark on an aggressive rate hike tangent at a time when the Chinese and European economies are on the cusp of a struggle, which isn’t great for copper prices, especially. with China expected to be in an extended lockdown,” said Stephen Innes, managing partner at SPI Asset Management.

The U.S. central bank‘s Federal Open Market Committee will begin its interest rate meeting later today and is expected to raise borrowing costs by half a percentage point when it announces its decision on Wednesday.

Beijing is banking on mass testing to locate and isolate infections and avoid a Shanghai-style lockdown. China’s capital of 22 million has tightened COVID restrictions during the five-day Labor Day holiday that runs until Wednesday.

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Recent weak economic data from the world’s second-largest economy has also raised concerns about global growth expectations.

COPPER: Indigenous Peruvian communities occupying a key copper mine will only agree to talks with company officials and representatives if the government lifts its emergency order for the area, the groups’ leaders told Reuters on Monday .

DOLLAR: The dollar held just below a 20-year high against its rivals, making dollar-denominated metals more expensive for buyers using other currencies.

COLUMN-Copper, an iron ore that does not yet reflect China’s weakening industrial outlook, Reuters columnist Clyde Russell said.

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* Wall Street closed a volatile trading day higher on Monday and benchmark US Treasury yields crossed the 3% mark as investors braced for a widely anticipated US Federal Reserve interest rate hike.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Uttaresh.V)

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