Copper prices fell to one-month lows on Monday as traders tracked the risk of contagion from the debt crisis at developer Evergrande, which is fueling new fears about China鈥檚 growth path.
Copper for delivery in December fell 3% from Friday鈥檚 settlement price, touching $4.116 per pound ($9,166 per tonne) midday Monday on the Comex market in New York. Benchmark copper聽on the London Metal Exchange earlier touched $9,052.50 a tonne, the lowest since Aug. 20.
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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鈥檚 deepening debt problems have triggered fears over the impact its potential collapse could have on China鈥檚 economy.
Major banks have reportedly been told that they won鈥檛 receive interest payments on loans that are due Monday, while interest payments of $84 million on the firm鈥檚 bonds are also due on Thursday.
鈥淐opper prices are falling in sympathy with risk-off trading and weak sentiment because of Evergrande,鈥� said Giles Coghlan, analyst at broker HYCM.
鈥淚t is a concern in the short term, but I don鈥檛 think it is going to be another crisis like Lehman鈥檚 because of the high level of down payments you need to make in China for property.鈥�
Copper prices also slipped as the dollar rose before Wednesday鈥檚 Fed meeting, where policymakers are expected to start laying the groundwork for聽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鈥檚 $4 trillion economic agenda as well as the need to raise or suspend the US debt ceiling.
鈥淭he edges of the bullish narrative cover are being pulled and the darker underlying reality is coming to the fore,鈥� said Sebastien Galy, a senior macro strategist at Nordea Investment Funds SA.
鈥淚t is taking the market more time to price in these shocks than I had expected, and the market is far more realistic as the buy-on-dip mentality fades with the fear of inflation.鈥�
(With files from Reuters and Bloomberg)