London copper shed early gains on Tuesday, as a firmer dollar made the greenback-priced metal expensive for holders of other currencies, while higher inventories in London Metal Exchange-registered warehouses eased some fears of supply tightness.
Three-month copper on the London Metal Exchange was down 0.1% at $9,724 a tonne, as of 0535 GMT.
The most-traded March copper contract on the Shanghai Futures Exchange fell 0.4% to 69,950 yuan ($11,027.73) a tonne.
“Market is in consolidation mode due to lack of convictions among participants. If inventory builds turn out to be smaller than expected, or we even start to see inventory drawdown post Lunar New Year, I believe investors then will be more comfortable to long again,” a Singapore-based trader said.
China demand doubts and rising inventories pressure copper
LME copper inventories were at 92,500 tonnes, their highest level since November 2021.
The dollar strengthened 0.1%, as traders continued to hold on to dollars but took the view that Federal Reserve tightening plans were largely priced in.
Meanwhile, leaders of a group of Peruvian communities said in a public hearing on Monday that they rejected a government proposal to prevent future blockades affecting MMG Ltd’s Las Bambas copper mine.
ShFE aluminium was up 0.5% at 21,175 yuan a tonne, nickel rose 0.7% to 163,990 yuan, zinc fell 0.5% to 24,430 yuan and lead inched 0.1% lower to 15,615 yuan. Tin gained 3.7% to 316,950 yuan a tonne, having earlier hit a record high of 319,700 yuan.
The premium for cash nickel over the three-month contract surged to $495 per tonne, highest since April 2009, suggesting tightness in nearby supplies. Nickel inventories in LME-registered warehouses were at 97,038 tonnes, the lowest level in more than two years.
Swedish mining and smelting group Boliden expects to resume nickel production at its Harjavalta smelter in the near future, the company said on Monday, after production was stopped due to a slag explosion.