Shanghai base metals post weekly losses as demand outlook darkens

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BEIJING — Shanghai base metals posted weekly losses on Friday, as recent COVID-19 restrictions in top metals consumer China added to demand worries, with prospects of aggressive interest rate hikes in the United States also weighing on sentiment.

Leading the losses, the most-traded October tin contract on the Shanghai Futures Exchange has plunged 13.5% this week to close at 171,600 yuan ($24,862.72) a tonne, hitting the lowest since June 23, 2021 on Friday.

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ShFE nickel closed at 161,610 yuan a tonne after shedding 6.9% this week, copper lost 6% to 59,540 yuan a tonne and zinc fell 6.4% to 23,715 yuan a tonne.

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This week, the southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2 million residents, while parts of southern city of Guangzhou and the tech hub of Shenzhen also imposed curbs in battling COVID-19 flare-ups.

Data released on Thursday showed a resilient U.S. economy, giving the Federal Reserve more room to aggressively hike rates to tame inflation.

The dollar was headed for a third weekly gain in a row, firming at a two-decade high ahead of non-farm payrolls data due at 1230 GMT.

A stronger dollar makes metals expensive for buyers holding other currencies.

Three-month aluminum on London Metal Exchange climbed 0.2% to 2,297 a tonne by 0716 GMT, after hitting its lowest in 16 months on Thursday.

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Market participants are increasingly concerned that Europe’s energy crisis would impact demand, according to ANZ research.

The EU is likely to place restriction on gas consumption in the heavy industry if shortages persist, and these demand concerns are outweighing supply-side issues, it added.

LME copper dropped 0.7% to $7,543 a tonne, zinc was down 1.8% at $3,199.50 a tonne, and tin slipped 1.9% to a 20-month low of $20,655 a tonne.

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($1 = 6.9019 Chinese yuan) (Reporting by Siyi Liu and Dominique Patton; Editing by Rashmi Aich and Subhranshu Sahu)