7.9 C
New York
Monday, December 5, 2022

Copper lurches lower after strong US inflation data

LONDON: Copper prices turned lower on Tuesday after US inflation unexpectedly rose in August and pushed up the dollar as investors feared more hefty interest rate hikes that could curb economic growth and dampen metals demand.

Three-month copper on the London Metal Exchange (LME) had shed 1.2% to $7,861 a tonne by 1600 GMT after earlier touching its highest price since Aug. 26 at $8,153.

US Comex copper futures dropped 1.5% to $3.56 a lb.

Copper reversed after data showed the US consumer price index gained 0.1% last month, while economists polled by Reuters had forecast it would dip 0.1%.

“That (CPI data) basically put the cat among the pigeons – there’s been a sharp drop in stock markets and the dollar is strengthening. We’re seeing some of this recent buying activity in metals being reversed,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Copper had been supported earlier by tightness on physical markets.

The premium for LME cash copper over the three-month contract surged to as much as $150 a tonne on Tuesday, its highest since November 2021, indicating shortages of immediately available copper in the exchange warehouse system.

“The physical tightness has not gone away, but the market is responding to a signal that this may mean even higher rates for longer to combat inflation, which is not coming down at the pace the market was hoping for,” Hansen said.

The dollar index turned positive after the US data and was up 1.3%.

A stronger dollar weighs on commodities priced in the US currency by making them more expensive for buyers holding other currencies.

Aluminium prices pared gains, but remained in positive territory after news that China’s southwestern province of Yunnan had ordered producers of electrolytic aluminium to reduce power usage this week.

LME aluminium added 1.1% to $2,309 a tonne while zinc, another energy-intensive metal to have production curbed, rose 1% to $3,229.

LME tin dropped 1.6% to $21,115 a tonne, lead dipped 0.1% to $1,947.50 and nickel fell 1.1% to $24,305.

Copper lurches lower after strong US inflation data

Source: Brecorder

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -

Latest Articles

Popular Articles