Copper, Zinc And Nickel Prices Continued To Fall Despite A Rebound in Chinese Manufacturing

Copper had its worst second quarter in more than a decade, but the bloodletting that began the third quarter has not abated.

A rebound in Manufacturing in China, which consumes more than half the world's industrial metals, was not enough to offset weakness in the copper market after data released on Friday showed eurozone inflation had jumped to a record high.

Copper for September delivery fell more than 4% from Thursday's settlement, hitting a low of $3.55 a pound ($7,834 a ton) in morning trading on the Comex market in New York, its lowest since February 2021. The most-traded August copper contract in Shanghai closed down 4% at 61,630 yuan, or $9,190.

In London, aluminum fell 1.9 percent to $2,400 a ton, zinc fell 3.5 percent to $3,045, down 9 percent for the week, and nickel fell 2.4 percent to $22,150. Tin fell 4% to $25,400 on Friday, but the metal, widely used in the electronics industry, rose 6% this week. Lead was the only stock to rise on Friday, rising nearly 1 percent to $1,924.

China's PMI data showed manufacturing activity hitting a 13-month high in June, but Capital Economics said in a report that market participants, like the research firm itself, believed the indicator "reflected the lifting of lockout restrictions rather than economic recovery" :

"It is increasingly clear that demand concerns are taking precedence over supply issues in the metals markets.

"Prices for all base metals fell by more than 20 per cent in the second quarter, despite the fact that energy prices remain high (which raises the cost of metals production), ultra-low exchange inventories and, in most cases, depressed refined production.

"We think prices have further to fall in the second half, but we suspect that the big drop is now behind us."

Shares of major copper producers sold off again on Friday. BHP shares were down 4.8 per cent in New York, Rio 3.3 per cent and Vale 4.6 per cent, while Glencore was the worst performer in afternoon trading in New York, down 5.6 per cent.