LONDON: Copper prices fell in London on Thursday on a stronger dollar and receding hopes of a March cut to US interest rates, though losses were limited by tighter supply and positive data from China. Three-month copper on the London Metal Exchange (LME) fell 0.8% to $8,540 a metric ton in official open-outcry trading.
Copper was rising in the second half of January and even touched a one-month high on Wednesday at $8,704.50 before stumbling after the US Federal Reserve pushed back on the idea of an interest rate cut as early as March. That kept the dollar close to recent highs, making metals more expensive for buyers using other currencies, and worsened prospects for growth-dependent commodities.
But copper, used in power and construction, is likely to find a price floor quickly as rising investment in the power grid in China helps to offset the country’s sluggish property sector, said Dan Smith at Amalgamated Metal Trading.
“The sell-off is likely to be short-lived,” Smith said. “The trend is upwards for the next couple of months.” A private-sector survey showed that China’s factory activity expanded in January and new export orders registered a first rise since June.
Indicating weak current demand, the discount for LME cash copper to the three-month contract remains close to a record high of $108. On the supply side, inflation hit miners in 2023, causing some producers to cut output or suspend new projects, ANZ said in a research note. These cuts will also help to provide a floor for metals prices, it added.
Miner and trader Glencore reported lower copper and nickel production in 2023 and signalled a further decline in output this year. LME aluminium declined 1.3% to $2,250.5 a ton in official activity after a 4.4% fall in January. Zinc fell 1.6% to $2,488, lead shed 0.4% to $2,149, tin was down 1.1% at $25,940 and nickel lost 0.2% to $16,230.
Source: Brecorder
