Copper edges down as US dollar strengthens

Copper prices declined on Wednesday as a strengthening US dollar made greenback-priced commodities more expensive for holders of other currencies.

The three-month copper on the London Metal Exchange fell 1.1pc to $6,702.50 a tonne by 0703 GMT, while the most-traded October copper contract on the Shanghai Futures Exchange dipped 0.6pc to 51,430 yuan ($7,571.81) a tonne.

The dollar held onto gains against major currencies on Wednesday, supported by positive US economic data and concerns about a second wave of coronavirus infections in Europe and Britain.

"It's the strong US dollar (behind copper's price fall). There's also a sell-off in technology equities, gold and silver, pulling down copper. But this is still a buy-the-dip moment for copper," said a Singapore-based metals trader.

"In the near term, we're waiting for a new fiscal stimulus to be passed. But because we're so close to the US presidential election, I think it's unlikely that anything can get done," the trader said.

FUNDAMENTALS

The premium of LME cash copper over the three-month contract was last at $28 a tonne, indicating nearby supply tightness. Meanwhile, the copper premium at bonded warehouses in China provided by the Shanghai metal exchange market fell to $55 a tonne, its lowest since May 2019.

The premium of ShFE cash zinc over LME cash zinc rose to $201.04 a tonne, its highest since January 2019.

China's 1.4pc-1.5pc nickel ore prices rose to $95.86 a tonne, its highest since February 2015, latest data provided by Antaike on Refinitiv Eikon showed.

LME nickel fell 0.8pc to $14,485 a tonne, lead declined 0.8pc to $1,869 a tonne and zinc dropped 1.4pc to $2,430.50 a tonne.

ShFE aluminium fell 1.7pc to 14,345 yuan a tonne and zinc was down 1.2pc to 19,520 yuan a tonne.