LONDON: Prices of industrial metals eased on Tuesday as the dollar firmed on positive sentiment from a virtual meeting between the leaders of the world’s largest economies.
The closely watched conversation between Chinese President Xi Jinping and US President Joe Biden yielded no immediate outcomes but struck a positive tone and was seen as a chance to improve relations.
The dollar index climbed to a 16-month high, making copper and other metals, priced in the US greenback, less attractive to global buyers.
“(The interaction between the US and China) is positive, we saw what happened in 2019 and last year with the trade dispute: the macro suffered,” said independent analyst Robin Bhar, adding that there was a knock-on negative effect on base metals.
Benchmark copper on the London Metal Exchange eased 1.3% to $9,549 per tonne by 1740 GMT.
US retail sales rose more than expected in October, giving the economy a lift at the start of the fourth quarter and raising the likelihood of a tightening in monetary policy.
OUTLOOK: Copper prices are expected to fall as 2022 approaches due to accelerated ramp-up of mine supplies and falling demand, mainly from the slowing Chinese construction sector, which is the biggest end-user of the metal, Capital Economics said.
INVENTORIES: On-warrant copper inventories in LME-registered warehouses are at their highest in nearly a month at 53,175 tonnes.
SPREAD: The premium of LME cash copper to the three-month contract has plunged to $32.50 from about $1,103.50 a month ago, pointing to easing concerns of nearby availability of metal.
ALUMINIUM: Prices for the lightweight metal were dragged down by falling prices of thermal coal, which lowered production costs for smelters in top producer China that are powered by the fossil fuel.
LME aluminium shed 3.2% to $2,571 a tonne and has lost about 18% over the last month.
COAL OUTPUT: China said it would continue raising coal supply as part of attempts to cool prices and increase power generation capacity.
OTHER METALS: Zinc rose 0.4% to $3,229, lead gave up 1.4% to $2,293 and tin was up 0.7% to $37,750, while nickel shed 0.9% to $19,425.