Copper eases, heads for weekly dip as US-Iran peace talks postponed

LONDON: Copper prices fell for a second straight session on Friday, heading for a weekly loss after peace talks between the United States and Iran were postponed and the dollar stood firm.

Benchmark three-month copper on the London Metal Exchange was down 0.7percent at USD13,594 a metric ton in official open outcry activity. Switzerland said US talks with Iranian negotiators on a pact to end the Middle East conflict would not take place on Friday, while fighting flared in Lebanon, fuelling uncertainty about whether a lasting truce can be found.

The prior agreement of a peace pact had helped drive a four-day winning run for copper, but the metal is now on course to end the week 0.6percent lower.

The dollar index hit a 13-month high this week, largely thanks to Wednesday’s Federal Reserve meeting, which increased the prospects for a rate hike by year-end.

A firmer greenback makes dollar-denominated metals more expensive for holders of other currencies. “A stronger dollar, renewed concern about tighter US policy and fading confidence after repeated failures to hold above USD13,800 are all making the market look heavier,” Sucden Financial said of copper.

“At the same time, the underlying structural support from tariff distortion and low visible inventories has not disappeared, which is why the move is still choppy,” the brokerage added in a note. LME copper inventories of 352,150 tons are the lowest in almost three months, while Shanghai Futures Exchange copper stocks of 143,875 tons are the lowest since December after a 23.6percent drop from last week. The Chinese bourse is closed on Friday for the Dragon Boat Festival. Aluminium was the sole gainer on the LME, rising 0.3percent to USD3,397.50 after receding earlier in the week as Gulf supply fears eased.

Still, Goldman Sachs raised its average aluminium price forecast, assuming Middle East production will face a slower recovery. Nickel dipped 0.5percent to USD17,750, tin shed 1percent to USD53,125, zinc slipped 1.4percent to USD3,588, and lead lost 0.8percent to USD1,968.