LONDON: Copper prices fell on Tuesday as the dollar rose and worries about demand growth in top consumer China and elsewhere subdued sentiment but concerns about supply curbs helped limit losses. Benchmark copper on the London Metal Exchange was down 0.6 percent at $5,815 a tonne at 1210 GMT.
A higher US currency makes dollar-denominated commodities more expensive for holders of other currencies, potentially undermining demand.
Traders say that is particularly worrying in the context of the Chinese yuan, which has been falling since the start of the year, as China accounts for about half of global demand for industrial metals.
"There are downside risks around China, key areas like automotive and construction look like they are going to have a much slower year this year compared to last year," Oxford Economics commodities analyst Dan Smith said.
"China's power sector could keep things rolling along but we think the hype around Trump is overdone." Commodity and equity markets rallied after Donald Trump won the US presidential election in November, on expectations of stronger growth to come due to expansionary fiscal policy.
Traders expect the prospect of a strike at the Escondida copper mine in Chile, the world's biggest, and Indonesia's ban on exports from Freeport McMoRan's Grasberg mine to support copper prices. Nickel was down 0.5 percent at $10,390.
The metal has been boosted by expectations of lower supplies after the Philippine government ordered the closure of some mines for environmental reasons.
"More important to the sustainability of nickel's bullish narrative is whether Indonesia will further ramp up its output, as it has already been doing for some time now," INTL FCStone analyst Edward Meir said in a note.
"New Caledonia is also gearing up, granting three more companies the right to export nickel ore to China.
Pressure could also start forming on the demand side as well; although Chinese stainless demand has been very strong this past year, we don't see the same rate of growth in 2017."
Tin was down 1.8 percent at $18,880 off an earlier low of $18,810, it lowest since September, as higher inventories in LME approved warehouses eased concern about supply.
"There's also some talk about China abolishing export taxes on tin," a metals trader in London said. Aluminium fell 0.4 percent to $1,826, zinc slipped 0.6 percent to $2,776 and lead lost 1.1 percent to $2,321 a tonne.
Comments
Comments are closed for this article.