LONDON: Copper prices were lower in choppy trade on Wednesday as a stronger dollar overpowered high activity levels in European factories and as coronavirus cases rise in the bloc.
Benchmark copper on the London Metal Exchange (LME) was down 0.8% to $8,907 a tonne by 1820 GMT, after gaining in early trade.
Investors in search of a safe-haven pushed the US dollar to a four-month high, reflecting fears that extended lockdowns in Europe would delay a global economic revival. Potential US tax hikes and higher Sino-US tensions also boosted the dollar.
“All these factors are not good for risk sentiment so they are pushing the dollar up and commodities down,” said Gianclaudio Torlizzi at consultancy T-Commodity.
Euro zone economic activity made a surprise return to growth this month as factories ramped up production to the fastest pace in over 23 years, but a third wave of coronavirus infections has raised concerns over the economy going forward.
Copper, used in the power and construction industries, is also seen as a gauge for the health of global economy.
Alastair Munro at brokerage Marex Spectron said copper had benefited from the positive European data, as well as a bounce in crude oil prices.
The LME net speculative long was at 33% of open interest compared to a multi-year high of 62% touched last month, according to brokerage Marex Spectron.
Inventories of copper in warehouses registered with the LME have jumped to 129,950 tonnes, the highest since December, compared to 74,000 tonnes on Feb. 3. This has eased concerns over supply availability.
Visible stocks of copper on other exchanges have also climbed.
The premium of the LME cash copper contract over the three month contract has been erased, after it touched $62 a tonne in February.
LME aluminium was up 1.3% at $2,250 a tonne, zinc fell 1.6% to $2,791, lead shed 0.7% at $1,935, tin was down 2.3% at $25,310, and nickel added 0.2% at $16,185.
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