Wednesday, 18 March 2015 21:12
LONDON: Copper hit a three-week low on Wednesday on poor prospects in top consumer China and before a Federal Reserve meeting expected to lay the groundwork for an increase in U.S. interest rates.
The Fed is today expected to remove the word “patient” from its statement on the timing of its first rate rise since 2006, possibly paving the way for policy tightening as early as June.
The dollar was steady near its recent 12-year peak against a basket of currencies. A strong dollar makes dollar-priced metals costly for non-U.S. investors.
In China there was more evidence of economic weakness after prices for new homes fell at the fastest pace on record in February. The cabinet has promised “flexible” use of monetary policy to support the economy.
“China is moving away from a growth-at-all-costs model. This is fundamentally affecting heavy industries. It’s entirely possible you could see weak apparent demand in 2015 as base metals readjust to the new model,” said Nic Brown, head of commodities research at Natixis.
Three-month copper on the London Metal Exchange traded down 1.9 percent in official midday rings to $ 5,675 a tonne, having earlier hit a three-week low of $ 5,654. The metal is down about 10 percent so far this year.
Chinese consumer demand remains tepid a month after the Lunar New Year, while smelters are producing ample copper supply. But several miners have cut supply forecasts, which is expected to affect refining capacity later in the year, underpinning prices.
Top copper producer Codelco said it is still working to get a key production unit at its newest mine running at capacity , while workers blocked access to Freeport’s huge Indonesian copper mine for a third day in a dispute over wages.
Against that, the Indonesian government said Newmont Mining Corp’s copper export permit will be extended for six months on Wednesday after the company gave assurances over its commitment to build a smelter with Freeport-McMoRan Inc.
LME lead was last bid down 0.2 percent to $ 1,719 a tonne in rings, having earlier hit its lowest since June 2010 at $ 1,715 a tonne, while tin was last bid down 1.3 percent at $ 17,125 a tonne, having earlier hit its lowest since September 2011 at $ 17,120 a tonne.
“We suspect there are growing volumes of lead scrap available in the Asian market but we are struggling to find out where it’s being recycled and how it’s coming back to the lead market,” Brown said.
Nickel traded down 0.9 percent at $ 13,600, having earlier hit its lowest since January last year at $ 13,570, while aluminium traded down 0.6 percent at $ 1,776.
Copyright Reuters, 2015