Investors are “panicking” about the potential impact of  fresh lockdowns and Covid flareups across the country, said Jia Zheng, a trader with Shanghai Dongwu Jiuying Investment
Management Co.

The hawkish drumbeat from central banks, which spurred gains in the dollar, will also continue to put more pressure on commodities. Cleveland Fed President Loretta Mester reiterated the need to raise the US benchmark rate above 4% by early next year and said she doesn’t anticipate cuts in 2023.

Concerns over demand are outweighing continued challenges on the supply side. Chile, which accounts for more than a quarter of the world’s mined copper, reported an 8.6% decline in production in July from a year earlier. In China, Shanghai’s two-month lockdown earlier this year is still rippling through the economy, with businesses struggling with a sluggish recovery and stalled demand.

Eoin Treacy's view

I don’t think most investors fully comprehend how large China’s copper demand is. China’s infrastructure and manufacturing sectors consume more than half of all copper supply. The cessation of residential construction is having a significant knock-on effect for prices.

The demand growth story for batteries and motors in the renewable energy sector is a tomorrow story. Factories are still being built, chemistries are innovating all the time and much still depends on government supports.

The best-case scenario for copper prices is a swift recovery following the current slump similar to the rebound between 2009 and 2011 from deeply depressed levels. In the meantime, the price is trending consistently lower.
The LME Metals Index failed to hold the breakout to new all-time highs and susceptible to additional weakness as the global economy approaches a contraction.