Copper prices fell to one-month lows on Monday as traders tracked the risk of contagion from the debt crisis at property developer Evergrande, which is fueling new fears about China’s growth path.
Copper for delivery in December fell 3% from Friday’s settlement price, touching $4.116 per pound ($9,166 per tonne) midday Monday on the Comex market in New York. Benchmark copper on the London Metal Exchange earlier touched $9,052.50 a tonne, the lowest since 20 August.
The property giant has started to repay investors in its wealth management business with property this week while struggling to meet the interest payments on its debts. The company’s deepening debt problems have triggered fears over the impact its potential collapse could have on China’s economy.
Major banks have reportedly been told that they won’t receive interest payments on loans that are due Monday, while interest payments of $84 million on the firm’s bonds are also due on Thursday.
Copper prices are falling in sympathy with risk-off trading and weak sentiment because of Evergrande, aver analysts following up on this event. Copper prices also slipped as the dollar rose before Wednesday’s Fed meeting, where policymakers are expected to start laying the groundwork for paring stimulus. Aside from Evergrande and the prospect of reduced Fed stimulus, financial markets also face risks from uncertainty over the outlook for President Joe Biden’s $4 trillion economic agenda as well as the need to raise or suspend the US debt ceiling.