London copper falls as demand outlook dims and dollar firm weighs

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London copper prices, which are used as an indicator of economic health by investors, were weighed on Tuesday by weak demand prospects from China’s top consumer, the strength of the US dollar and fears of a global recession. .

Three-month copper on the London Metal Exchange fell 1.3% to $7,331.50 a tonne, as of 0726 GMT, tin fell 2.6% to $24,070 a tonne , zinc fell 2% to $2,945 a tonne and lead lost 1.3% to $1,973 a tonne.

The dollar hovered just below its two-decade high, making greenback-priced metals more expensive for holders of other currencies.

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Weak demand from the main metal consumer, China, due to COVID-19 outbreaks and fears of a looming global recession also weighed on prices.

“I am worried about the (Chinese) real estate market. The impact of COVID-19 – with less income for individuals – is hurting potential demand for future real estate projects,” said He Tianyu, demand analyst at Chinese copper at CRU.

Lockdowns in China have also delayed construction projects and, in the long run, could hurt cash flow for construction companies, he added.

U.S. homebuilder sentiment fell in July to its lowest level since the early months of the pandemic, as high inflation and the highest borrowing costs in more than a decade virtually crippled customer traffic.

Meanwhile, an indicator for service sector activity in the northeastern United States turned negative this month for the first time in a year, and businesses see no improvement over the of the next six months.

The most-traded copper contract in August on the Shanghai Futures Exchange rose 1.3% to 56,030 yuan ($8,304.80) a tonne, following an overnight gain in London when the market benefited of a brief relief in the Chinese real estate market.

Nickel ShFE jumped 3.3% to 148,020 yuan per ton, aluminum rose 2.1% to 17,960 yuan per ton, lead rose 1% to 15,095 yuan per ton and tin fell 2% to 187,010 yuan a ton.

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($1 = 6.7467 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Rashmi Aich and Sherry Jacob-Phillips)