LONDON: Copper prices came under pressure on Thursday from a higher dollar and spiking US Treasury bond yields, but losses were capped by supply worries fuelled by shortages of concentrates.
Benchmark copper on the London Metal Exchange was down 0.3% at $9,035 a tonne at 1707 GMT.
Prices of the metal, used as a gauge of economic health by investors, touched $9,617 a tonne in February, the highest since August 2011 and up more than 15% since the start of the year.
“Copper and other base metals have struggled to find clear direction in the last few weeks thanks to macro-market jitters and the bond market tantrum which caused consternation in cross-asset markets,” ING analyst Wenyu Yao said.
Extremely tight copper mine supply has pushed spot treatment charges for concentrates to their lowest in more than a decade, with three sources reporting miner-trader deals of less than $20 a tonne in recent tenders.
“Focus will be on whether those depressed margins could translate into smelter curtailments and refined production losses,” ING’s Yao said.
A rising US currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand.
Rising stocks of copper in LME-registered warehouses are weighing on sentiment. They are up more than 40% at 106,425 tonnes since the beginning of March.
Copper stocks monitored by the Shanghai Futures Exchange stand at a six-month high of 171,794 tonnes. Higher availability has narrowed the premium for the cash over the three-month contract to around $12 a tonne from levels above $60 in late February.
Worries about supplies of the soldering metal have been reinforced by two companies holding large numbers of warrants - title deeds to metal.
The premium for the cash over the three-month has flared out again and is now above $2,500 a tonne.
Three-month tin gained 0.4% TO $25,850 a tonne.
Aluminium slid 0.5% to $2,217, zinc fell 1.3% to $2,790, lead rose 0.4% to $1,923 and nickel fell 0.2% to $16,040 a tonne.