LONDON: Copper prices moved lower on Monday as a currency crisis engulfing Turkey rippled across markets and prompted investors to dump riskier assets.
Chinese and European stocks and emerging market currencies including the Chinese yuan all fell, while the dollar touched a 13-month high, ramping up pressure on metals priced in the U.S. currency by making them more expensive for buyers with other monies.
“It’s very much a macro trade,” said Deutsche Bank analyst Nick Snowden. “The risk from a broader emerging markets currency perspective is a key driver of (metals) prices.”
COPPER: Benchmark copper on the London Metal Exchange (LME) was down 0.3 percent at $6,169 at 1405 GMT, near a one-year low of $5,988 hit in July.
The metal used in power and construction has tumbled around 16 percent since early June on fears that a U.S.-China trade dispute will damage economic growth and metals demand.
SPECULATORS: Speculators have expanded bets on lower prices. In Comex copper the net short position is the highest since September 2016, while on the LME it is rising towards July’s peak, brokers Marex Spectron said.
CHINA ECONOMY: China, the world’s largest metals user, continued to stimulate its slowing economy. Banks issued more new loans than expected in July, growth of broad money supply rebounded to a five-month high and the state planner approved $11.45 billion of urban railway projects in a northern city.
CHINA DEMAND: More infrastructure spending could see China consume 1.3 million tonnes more copper in the second half of 2018 than in the first, vastly outweighing any loss of demand due to trade disputes, JPMorgan analysts said in a note.
CHILE STRIKES: A vote by workers at Chile’s Caserones copper mine to strike from Tuesday failed to lift prices. Caserones produced 122,800 tonnes of copper last year, less than the 464,000 tonnes made at Chile’s El Teniente, where most unions said they accepted a pay offer.
Investors were looking to the outcome of talks this week at Chile’s Escondida, the world’s largest copper mine with output of 903,000 tonnes last year.
ZINC: LME zinc was down 1.2 percent at $2,517.50 a tonne, moving towards July’s 13-month low of $2,473.85.
ZINC STOCKS/SPREAD: Zinc stocks at LME-registered warehouses rose by 14,775 tonnes, back to levels held in June and July. Cash zinc was at a $4.50 discount to the three month contract after trading at a premium of more than $50 a week ago, signalling greater availability of nearby metal.
OTHER METALS: Aluminium was down 0.8 percent at $2,088 a tonne, nickel gained 0.2 percent to $13,845, tin was 0.6 percent lower at $19,385 and lead was up 0.1 percent at $2,101.
Source: Brecorder
