On Wednesday, copper prices stepped lower after the International Monetary Fund (IMF) slashed its forecast for global economic growth.
The most active US futures tied to the metal dwindled 1.21% or 0.05 points to $4.66 per metric ton. It trailed a drop of 1.75% to $4.72 per share in the previous trading session.
The financial institution reduced nearly a full percentage point on its projection, citing the impact of Russia’s war in Ukraine.
At the same time, it warned that the mounting inflation presents a clear and present danger for many countries. Nevertheless, the outlook for the metal remained bullish.
Accordingly, China, which accounts for about half of global metals demand, will step up its financial support for the economy.
The Chinese central bank offered a modest cash boost to industries, firms, and people affected by escalating COVID-19 outbreaks.
Meanwhile, MMG Ltd’s Las Bambas copper mine in Peru has paused operations. The stoppage came after residents entered the company’s property as a protest.
Las Bambas accounts for 2.00% of the global supply of the metal. However, it is the subject of recurring disruptions from impoverished communities that demand higher financial contributions from the mine.
Correspondingly, the Chilean Copper Commission increased its forecast for 2022 copper prices to $4.40 per pound. The agency perceived scarcity due to the ongoing geopolitical conflict in Eastern Europe. Last January, it maintained its estimated cost at $3.95 per pound.
The commission further explained that the increase is due to varying economic factors. It also noted risks, indicating that the global supply would not meet the high demand.
Chile remains the largest producer of copper globally, accounting for 5.60 million metric tons in 2021.
Copper, Nickel down on higher inventories
Meanwhile, another downward pressure on copper is the climbing inventories in LME-approved warehouses. Since November, the stocks climbed to their highest, 8,150 tons higher to 118,825 tons.
However, the overall worldwide supplies remain at historically low levels. Subsequently, inventories in Shanghai monitored warehouses dropped to a two-month low of 88,682 tons.
Similarly, London nickel contracts slumped 1.08% or 363.50 points to $33,404.50 per metric ton. Its market registered a surplus of 10,500 tons in February. This upbeat data went above the deficit of 5,700 tons from the same period last year.
Likewise, aluminum skidded 0.28% or 9.00 points to $3,251.00 per metric ton. Then, zinc also fell 1.37% or 61.50 points to $4,437.00 per metric ton.