LME Copper Hit A Nine-month Low On Fears Of Recession And Weakening Demand

London Metal Exchange copper futures edged higher on Monday but hit a nine-month intraday low as rising interest rates heightened concerns about a possible global recession and weakening demand for industrial metals, particularly from top consumer China.

LME benchmark copper for three-month delivery rose 0.18 percent to $8,977.50 a tonne at 17:00 London time, June 20 (00:00 Beijing time, June 21). It earlier hit $8,830, its lowest since September 21.

"Market sentiment is very risk-averse as policy makers are raising interest rates to control inflation," said John Meyer, an analyst at SP Angel, adding that sentiment was also driven by concerns about slowing demand in China due to the country's COVID-19 dynamic zero-out policy.

The Fed last week raised the benchmark federal interest rate by 75 basis points, the biggest increase since 1994. Interest rates are expected to rise steadily in 2022.

The European Central Bank last week signalled a series of rate increases starting in July, the Bank of England raised rates by a quarter point to 1.25 per cent last week and the Swiss National Bank raised rates for the first time in 15 years.

"Apart from wanting to avoid further departures from the path taken by the Fed, the central bank is more likely to take a wait-and-see approach as it looks to conserve ammunition before the economy fully opens up," brokerage Marex said in a report.

"But there is certainly no meaningful support for the housing sector, whose slowdown is seen as having a bigger effect than any fiscal stimulus is likely to have."

Support for copper has come from low inventories in LME-registered warehouses. LME copper stocks now stand at 117,025 tonnes, down 35 per cent since mid-May.

Global primary aluminium production rose 0.43 percent year on year to 5.85 million tonnes in May, the International Aluminium Institute (IAI) said on Monday. China's estimated primary aluminium production rose to 3.42 million tonnes in May, up from 3.55 million tonnes in May last year.