METALS-London base metals plunge on weakened sentiment amid inflation woes

Band Siyi Liu and Emily Chow

BEIJING, August 10 (Reuters)Base metal prices in London fell on Wednesday as a two-year high inflation rate in China rattled market sentiment as investors braced for further aggressive interest rate hikes Americans ahead of widely anticipated inflation data.

Three-month copper on the London Metal Exchange CMCU3 fell 0.9% to $7,909.50 a tonne at 06:15 GMT.

The consumer price index (CPI) in China, the world’s largest consumer of metals, rose 2.7% year-on-year last month, the fastest pace since July 2020 and larger than the 2.5 gain % in June, but lower than the 2.9% expected by economists.

Factory gate inflation, however, hit its lowest level since February 2021 as commodity prices fell on already slower construction activity.

The producer price index (PPI) rose 4.2% year on year, after rising 6.1% in June.

“Despite the inflation figures falling short of expectations, sentiment has weakened further as a likely tighter monetary policy would hurt demand for copper and other metals,” one trader said.

The US CPI, due at 12:30 GMT, is expected to show prices rising at an annual rate of 8.7% in July, according to the median estimate of economists polled by Reuters, which would mark a slight downward correction from compared to 9.1% in June. USCPNY=ECI

Even though the data is weaker than expected, the US Federal Reserve is expected to continue raising rates at its September meeting to keep inflation under control.

The most traded copper contract in September on the Shanghai Futures Exchange SCFcv1 fell 0.4% to 60,970 yuan ($9,022.97) a ton.

zinc LME CMZN3 fell 0.7% to $3,511 a tonne, CMPB3 lost 0.2% to $2,161.50 a tonne, tin CMSN3 fell 0.9% to $24,200 per tonne.

Zinc ShFE SZNcv1 rose 2.4% to 24,800 yuan per ton, aluminum SAFcv1 rose 1.1% to 18,690 yuan per ton, while nickel SNIcv1 fell 1% to 166,030 yuan,

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($1 = 6.7572 yuan)

(Reporting by Siyi Liu and Emily Chow; Editing by Uttaresh.V and Sherry Jacob-Phillips)

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