(Bloomberg) — Base metals sank as fresh fears over property turmoil in China gripped markets despite news that China may unleash another round of stimulus.
All six major base metals fell on the London Metal Exchange, with zinc losing as much as 2.5% to $2,449 a metric ton, the lowest on an intraday basis in a month.
Country Garden Holdings Co., a major developer in China, warned that it might not be able to meet repayments on offshore debt and has hired advisers, a strong indication it faces a restructuring. China is the world’s most important market for base metals, and the announcement has reignited investor fears about possible market contagion and an even deeper slump in construction activity.
Country Garden has four times the number of projects than China Evergrande Group, whose 2021 debt failure also spooked commodities. To help sure up the economy, policymakers are weighing the issuance of at least 1 trillion yuan ($137 billion) of extra sovereign debt for spending on infrastructure, according to people familiar with the matter.
The drop in metals prices — as well as the outlook for China’s vast economy, including its real estate industry — is a key topic for producers and traders as they gather in London at this week’s high-profile LME Week.
While metals had held up relatively well this year even amid China’s economic slowdown and property crisis, the LMEX Index, a hold-all gauge, hit the lowest level since November last week. Strong growth in sectors like new-energy technology has helped to offset the slump in real estate activity.
Three-month zinc slipped 1.8% to $2,468.50 a metric ton as of 11:38 a.m. in New York. Copper, lead, nickel, aluminum and tin all retreated as well.
