Chinese Assets, Commodities Routed as COVID-19 Lockdowns Reach Beijing

  • Commodities News
Chinese Assets, Commodities Routed as COVID-19 Lockdowns Reach Beijing

By Geoffrey Smith -- Chinese assets and global prices for crude oil and industrial metals plunged on Monday, amid fears of ever-wider lockdowns across China to stop the spread of COVID-19.

The moves are a response to the announcement of mass-testing and mobility restrictions in the capital Beijing, at a time when most of the country's biggest city, Shanghai, has already been locked down for nearly a month.

Iron Ore Futures in Shanghai fell 0.2%, while Aluminum Futures in London fell 4.5%, Zinc Futures  fell 4.9%, and Copper and Nickel Futures fell 1.8% on fears that industry around the capital could be forced into the same kind of extended closures that have plagued Shanghai. 

Crude oil prices, meanwhile, slumped over 4% as participants priced in another hit to Chinese demand. China, the world's largest oil importer, and its second biggest consumer, overall, has already seen its demand fall by around 1.2 million barrels a day this month, according to a report last week by Bloomberg. 

Beijing reported a relatively modest 29 COVID-19 cases out of a population of 21.5 million on Sunday, but authorities warned that the disease may have been circulating undetected for a week already. Reuters reported urgent buying of food and other necessities as inhabitants prepared to be confined indoors, as has happened to Shanghai and other cities across the country this year. 

Residents of the district of Chaoyang, which is home to nearly 3.5 million people and has accounted for most of the cases so far, have been told to stay home and take three COVID tests in the coming week, Reuters added. 

The news pummeled Chinese stock markets, sending the Shanghai Shenzhen CSI 300 down 4.9% to its lowest since May 2020 and the Hong Kong Hang Seng down 3.7% to its lowest in six weeks. The offshore Chinese yuan also weakened around 1% to 6.5878 to the dollar, its lowest since November 2020.

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