Chinese demand worries trigger funds selloff in metals

Chinese demand worries trigger funds selloff in metals

A month-long rally in metals paused on Wednesday as concerns over demand from top consumer China and a rebound in the U.S. dollar triggered selloffs from funds and producers.

Three-month aluminium on the London Metal Exchange CMAL3 was down 1.7% at $2,507.50 per metric ton by 1043 GMT. It reached a eight-week high of $2,554 on Tuesday, up 12% since the start of August.

Systematic buying from funds paused in the metals space, and producers were seen selling into the rallies, Alastair Munro at brokerage Marex said.

The senior metals strategist also cited disappointing performances across major metals-consuming industries in China spanning from automakers to developers and internet companies.

China's weak factory output and low confidence in the country's struggling property sector could reverse the upward momentum seen in the past month, he said.

LME copper CMAL3 fell 1.8% to $9,283 a ton, zinc CMZN3 decreased 2.3% to $2,874, lead CMPB3 shed 1.9% to $2,083.5, nickel CMNI3 declined 0.9% to $16,980, and tin CMSN3 eased 0.8% to $33,000.

Also depressing metals prices was a recovery in the dollar from its one-year low, as traders awaited economic data that could set the tone for the Federal Reserve's September policy meeting.

The market is also nervous ahead of a crucial quarterly earnings report from AI favourite Nvidia NVDA.O due later today, Munro added.

Any disappointment in the chip giant's results would affect not only the equities market but also broader commodities, he said.