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Growth worries push copper prices lower

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LONDON — Prices of copper and most other industrial metals fell on Wednesday on concerns that slowing economic growth and COVID-19 lockdowns in top consumer China would depress demand.

Benchmark copper on the London Metal Exchange (LME) was down 1.5% at $9,314 a tonne in official trading.

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Prices of the metal used in power and construction are down from a record high of $10,845 in March but still far above levels for most of the past decade.

Weak U.S. economic data and Chinese efforts to control coronavirus outbreaks have fueled fears that a global slowdown could be more severe than many had thought, said Saxo Bank analyst Ole Hansen.

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But he said that expected stimulus in China means that prices are unlikely to fall much further.

“I’m not worried,” he said. “Lockdowns in China can’t last for ever and the government cannot live with very low growth.”

DOLLAR: Metals were also under pressure from a strengthening of the U.S. dollar, which makes metals priced in the currency costlier for buyers in China and elsewhere.

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INTEREST RATES: Investors were waiting for minutes from the U.S. Federal Reserve’s May meeting, due at 1400 ET (1800 GMT).

The Fed and the European Central bank are expected to raise interest rates in the coming months. Higher rates typically restrain economic growth.

OUTLOOK: Chinese metals demand was weak across the board in March and April but is expected to pick up in the second half of 2022 as China eases COVID restrictions and stimulates growth, Bank of America analysts said in a note.

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“Demand should increase in the coming years as the energy transition accelerates and miners struggle to increase supply sufficiently to prevent shortages,” they added.

PERU: The leader of a Peruvian indigenous community whose protests have disrupted operations at the Las Bambas copper mine said that “progress” has been made in negotiations.

METALS PRICES: LME aluminum was down 1.5% at $2,857.50 a tonne, zinc fell 1.6% to $3,731, lead shed 1.6% to $2,133 and tin was down 1.1% at $33,750 while Nickel rose 0.8% to $26,750.

(Reporting by Peter Hobson Additional reporting by Enrico Dela Cruz in Manila Editing by David Goodman)

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