LONDON: Copper prices extended their downtrend on Tuesday on worries about global growth and demand due to interest rate hikes, a stronger dollar and climbing inventories.
Earlier, copper bounced as the dollar weakened, but the dollar index reversed higher after upbeat US data, including an unexpected rise in new home sales.
Benchmark copper on the London Metal Exchange (LME) had slipped 0.3% to $7,317.50 a tonne by 1615 GMT. It fell to $7,292 a tonne on Monday, a drop of 32% since hitting a record high of $10,845 a tonne in March and the lowest since July 21.
US Comex copper futures dipped 0.03% to $3.29 a lb.
“Markets are trading the macro at the moment and copper is no exception. Any weakness in the dollar will trigger a relief rally, even if only in the short term,” said Sucden Financial analyst Geordie Wilkes.
“But given the weak fundamentals, we expect copper prices to continue to trend lower.” The stronger dollar makes dollar-priced commodities more expensive for holders of other currencies, which could help sap demand if the trend persists.
This relationship is used by funds which trade using short-term buy and sell signals from numerical models.
Weighing on copper are expectations of shrinking demand for the metal in Europe due to a manufacturing recession caused by the energy crisis.
Clues to demand prospects will also come on Friday from surveys of purchasing managers at manufacturers in top metals consumer China, where COVID lockdowns have significantly undermined industrial activity.
Copper stocks in LME-approved warehouses, at 130,850 tonnes, are up nearly 30% since Sept. 15, and cancelled warrants - metal earmarked for delivery - at 7% are down from 50% in late August. Both have eased concerns about availability on the LME market.
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