Most base metals slip on China demand, US debt ceiling jitters
May 22 (Reuters) - Most nonferrous metals prices dropped on Monday as investors gauged lacklustre Chinese demand outlook and potential chaos in global financial markets following a surprise breakdown in the U.S. debt ceiling negotiations.
Three-month copper on the London Metal Exchange fell 0.8% to $8,184.50 a tonne by 0322 GMT, while the most-traded July copper contract on the Shanghai Futures Exchange slipped 0.6% to 64,800 yuan ($9,374.86) a tonne.
U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling later in the day, less than two weeks before the June 1 deadline after which Treasury expects the federal government will struggle to pay its debts.
A failure to lift the debt ceiling would trigger a default, likely sparking chaos in financial markets and a spike in interest rates.
Meanwhile, demand outlook in top consumer China was bearish across many metals. Players gathered for the first London Metal Exchange seminar and sideline events in Hong Kong since the coronavirus pandemic.
LME aluminium was down 1.1% at $2,257.50 a tonne, zinc declined 1.7% to $2,436 a tonne, tin shed 1.4% to $25,105 a tonne, nickel 0.9% to $21,095 a tonne and lead decreased 0.4% to $2,085 a tonne.
SHFE aluminium fell 1.4% to 17,970 yuan a tonne, zinc declined 2% to 20,265 yuan a tonne, tin lost 0.7% to 196,370 yuan a tonne, while nickel rose 1.1% to 165,230 yuan a tonne and lead increased 0.2% to 15,385 yuan a tonne.
However, copper prices are supported by low inventories, with stockpiles in SHFE warehouses falling to 102,511 tonnes, the lowest in more than four months. Inventories in Chinese bonded warehouses also declined.
Yangshan copper premium rose to a seven-week high of $35 a tonne on Friday, indicating better demand to import the metal into China, as the import arbitrage was open a few times last week.
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1400 EU Consumer Confid. Flash May ($1 = 6.9121 yuan)
(Reporting by Mai Nguyen in Hanoi; Editing by Sherry Jacob-Phillips)
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