Harvest Global Markets :

Copper prices dropped as aggressive rate hike scenario from major central banks are negatively affecting global growth in addition to fresh lockdowns in China, which is the top consumer of copper. Although, recent strikes in Chile (World’s largest copper producer) limit the downside movement of the metal due to supply disruption.

US fed raised interest rates by 75 basis points last week and considered the largest rise since 1994. While, China’s “Zero Policy” allowed government to constantly monitoring the spread of covid and set measures to prevent as the economy is struggling to move in the next phase to grow its manufacturing activities. Chile’s state owned codelco hit with workers strike nationwide on Wednesday to protest against closure of troubled smelter. The responsible parties are government and the company, a union official said.

There is a hope for the metal to indicate some demand as trade tensions between US & China starting to ease. US president Joe Biden is considering to remove some tariffs on Chinese goods worth billions of dollars, to ease pressure on trade war started back in 2019. Copper buyers are still worried on the fresh impose of lockdown in China’s Shenzhen & Macau cities as the virus is spreading in southern part of the country.

Further, the central banks’ tightening outlook-induced recession fears also remain a drag on the metal’s recovery. Also weighing on the red metal is the People’s Bank of China’s (PBOC) no change in monetary policy rates. That said, the PBOC kept the 5-year and 1-year Loan Prime Rate (LPRs) unchanged at 4.45% and 3.70% respectively during Monday’s announcement. The Chinese central bank’s inaction contrasts with the Western policymakers’ hawkish bias but fails to renew the market’s optimism but failed to renew optimism.

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