(Recasts, adds comment, London dateline)
By Pratima Desi
LONDON, July 4 (Reuters) – Copper prices fell to 17-months lows on Monday as new COVID restrictions in top consumer China, slowing global manufacturing activity and a jump in inventories sparked demand worries and a sell-off.
Benchmark copper on the London Metal Exchange (LME) was down a touch at $8,044 a tonne at 1040 GMT.
Prices of the metal used in power and construction earlier fell to $7,918, its lowest since February 2021.
“China’s manufacturers have had an awful time. People are fearful of inflation and recession, but the probability of recession is less than 50%,” said Dan Smith, managing director at Commodity Market Analytics.
“The market needs to find a floor, but industrial metals are starting to look like good value.”
COVID: Cities in eastern China tightened COVID-19 curbs on Sunday as coronavirus clusters emerged, posing a new threat to the country’s economic recovery under the government’s strict zero-COVID policy.
ACTIVITY: Global manufacturing struggled in June as higher prices and a darker economic outlook left consumers wary of making purchases, while Russia’s invasion of Ukraine added to supply chain disruptions, surveys showed.
INVENTORIES: Copper stocks
INFLATION: Hitting economic activity is soaring inflation and interest rate rises in many countries including the United States where the Federal Reserve is expected to deliver another 75-basis-point rate hike this month.
POSITIONING: Marex Analytics estimates that short copper positions — bets on lower prices — are as large as they were in 2015 when economic growth in China slowed to a 25-year low.
At close of business June 30, the copper short was 1.5 million or 43.6% of open interest compared to the peak of 3.1 million tons and 72.2% in 2015 and up from about one million tons and 29.8% on June 23, Marex said.
OTHER METALS: Aluminum
climbed 4.3% to $22,770 a tonne.
(Reporting by Pratima Desai; additional reporting by Brijesh Patel in Bengaluru; editing by Jason Neely) ((firstname.lastname@example.org)) ((For related news and prices, click on the codes in brackets: LME price overview
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