METALS-Copper touches three-week low as economic uncertainty lingers

By Ashitha Shivaprasad

May 22 (Reuters) - Copper prices hit a three-week low on Thursday and other base metals also eased as uncertainty persists over economic conditions and demand growth.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was down 0.4% at $9,498 a metric ton by 1600 GMT. Earlier in the session, prices touched their lowest since May 1 at $9,223.20.

"A real state of paralysis has swept through metals markets," said Alastair Munro at broker Marex, pointing to the expiry of LME benchmark contracts this week.

Prices have been pressured by a sharp rise in Chinese copper inventories CU-STX-SGH last week, ending a three-week run of large withdrawals. Analysts and traders said that the rise was due to tepid copper demand in China and steady output from a growing smelting sector.

Also weighing on the market was the prospect of more supply after Freeport Indonesia's Manyar smelter in East Java resumed operations ahead of schedule after a fire last year. It is expected to produce copper cathode by the fourth week of June.

Investor sentiment, meanwhile, remained subdued in the face of a deteriorating U.S. fiscal outlook, with last week's Moody’s downgrade fueling a growing “Sell America” narrative and leaving markets adrift.

Further dampening the market was a firmer U.S. dollar =USD after data showed U.S. business activity picked up in May, making dollar-priced metals more expensive for buyers with other currencies. USD/

LME lead CMPB3 was down 0.3% at $1,968 a ton after touching its lowest since May 9 at $1,947.50.

On-warrant LME lead inventories MPBSTX-TOTAL have surged by 91% over the past two days to 234,000 tons, their highest since December 2024.

Among other metals, aluminium CMAL3 dropped 0.6% to $2,456 a ton, nickel CMNI3 was down 0.6% at $15,510, tin CMSN3 fell 1.2% to $32,455, while zinc CMZN3 added 0.3% to $2,702.

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