LONDON: Copper prices slipped on Monday, pressured by a stronger dollar, though losses were capped by improving factory activity data from top consumer China and low Shanghai inventories.
Benchmark copper on the London Metal Exchange (LME) was down 0.2% at $8,539 per metric ton in official rings. Prices of the metal used in the power and construction industries rose to five-month highs of $8,716 last week.
Traders said funds sold copper after the dollar started to strengthen in early European trade. A stronger US currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand. Surveys of purchasing managers (PMI) in China showed manufacturing activity expanded at a quicker pace in December thanks to stronger gains in output and new orders while new export orders fell at a slower pace.
“Positives are China PMIs beating expectations and inventories in Shanghai, but the dollar has started the year on a much stronger footing,” one metals trader said. Copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) have dropped nearly 90% to 30,905 tons since late February.
In Shanghai’s bonded warehouses, copper stocks have fallen 96% to 6,500 tons since the middle of March. However, doubts about demand prospects can be seen in the discount for cash copper over the three-month contract trading near 31-year lows.
Elsewhere, aluminium was supported by worries about supplies of feedstock alumina after a blast last month damaged fuel stocks at the main terminal in Guinea, the world’s third-largest producer of alumina raw material bauxite.
However, aluminium stocks in LME-approved warehouses have risen 28% to 566,375 tons since Dec. 6, undermining sentiment on prices of the metal used in the power, construction and packaging industries. Aluminium was down 0.2% at $2,378 a ton.
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