LONDON: Copper prices fell to their lowest in two months on Thursday after the US Federal Reserve brought forward its expectations for raising interest rates, sending the dollar higher and sapping demand for metals.
Prices have also been weighed down by top consumer China’s plans to release industrial metals from its national reserves to curb surging commodity prices.
Three-month copper on the London Metal Exchange (LME) fell 4% to $9,285 a tonne by 1600 GMT, after earlier hitting its lowest since April 20 at $9,276.
The Fed signalled the changes to policy, which include raising interest rates and ending bond buying, may happen sooner than expected.
This pushed the dollar to its highest in two months, making commodities priced in the greenback more expensive and less appealing to holders of other currencies.
China is the world’s top metals consumer and a major release of reserves could significantly change global supply and demand balances.
LME on-warrant copper stocks rose to their highest in a year at 132,125 tonnes.
Funds continued to reduce their long positions in LME copper. The LME net spec long in copper had fallen to 15% of open interest as of Monday, compared to 62% in February, according to broker Marex.
LME aluminium shed 3% to $2,394 a tonne, zinc dipped 4% to $2,905, lead lost 3% to $2,133, tin gave up 1.8% to $30,645, while nickel slipped 2.5% to $17,180.
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