Copper nears 4-1/2-month low as recession jitters dampen demand outlook

Copper prices in London traded on Tuesday near the lowest since March, pulled down by a weak consumption outlook amid fears of a U.S. recession, though tight mine supply and demand growth potential from the energy transition sectors limited losses.

Three-month copper on the London Metal Exchange (LME) was down 0.8% at $8,817 per metric ton, as of 0531 GMT. The contract was hovering near a 4-1/2-month low of $8,714 hit on Monday and down 21% from a record high scaled in May.

The most-traded September copper contract on the Shanghai Futures Exchange (SHFE) tumbled as much as 3.3% to 70,630 yuan ($9,880.53), its lowest since March 13.

On the COMEX, fund managers reduced their net long positions for copper to 9,449 contracts by July 30, an 87% drop from May 21.

U.S. data showed job growth fell short of expectations and the unemployment rate rose, pointing to a greater vulnerability to recession and sparking hopes for a rate cut from the Federal Reserve.

"Nevertheless, we still see a soft landing and the imminent Fed rate cut will be supportive for metal prices to stabilise," said analyst Soni Kumari of ANZ.

SHFE aluminium fell 1% to 18,790 yuan a ton, nickel dropped 1.3% to 128,700 yuan, zinc declined 2% to 22,080 yuan, lead shed 4% to 17,155 yuan and tin decreased 2.2% to 242,250 yuan.