3.7 C
New York
Friday, February 3, 2023

Copper hits 5-week low as demand fears outweigh dollar’s influence

LONDON: Copper prices slipped on Wednesday to five-week lows as the market focussed on slowing growth and demand, while a lower dollar capped losses ahead of a statement from the U.S. central bank.

Benchmark copper on the London Metal Exchange traded down 1% at $8,235 a tonne in official rings from an earlier $8,188 a tonne, the lowest since Nov. 30. Technical support is at 8,150, where the 50-day moving average currently sits.

Minutes of the Federal Reserve’s Dec. 13-14 policy meeting due at 1900 GMT could provide clues to future U.S. interest rate moves and dollar direction, a key variable behind industrial metal price moves.

Surging COVID cases in top consumer China after the easing of restrictions have reinforced worries about demand, already under pressure from weakening global industrial activity.

“Globally, it doesn’t look good for industrial metals. China’s rapid reopening remains in focus with optimism around reopening, tempered by the number of cases,” a metals trader said. “The softening dollar is lending some support.”

A lower U.S. currency makes dollar-denominated metals cheaper for companies operating in a non-dollar environment, which could boost demand.

Demand angst puts copper on track for largest drop since 2018

Also weighing on the base metals complex is China’s Lunar New Year holiday later this month later this month when factories sometimes shut down for weeks.

Growing concern about demand for industrial metals is portrayed in the discounts, or contango, for cash metal over the three-month contracts for copper, aluminium, nickel and tin.

Zinc and lead where the cash contract is trading at a premium, or backwardation, are bucking the trend because of low stocks.

Stocks of zinc in LME-registered warehouses are at 27,750 tonnes for their lowest since August 1989 while cancelled warrants – metal earmarked for delivery – at 48% indicate more metal is due to leave LME warrant.

Lead stocks at 25,150 tonnes, are hovering near the 15-year lows hit in November, while cancelled warrants stand at 61%.

Aluminium fell 1.1% to $2,286 a tonne, zinc ceded 1.8% at $2,948, lead retreated 0.6% to $2,266, tin was down 1.4% to $25,115 and nickel lost 3.7% to $29,950.

Copper hits 5-week low as demand fears outweigh dollar’s influence

Source: Brecorder

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -

Latest Articles

Popular Articles