LONDON: Copper prices lost ground in low volumes on Wednesday on tepid demand in top metals consumer China and uncertainty about rising inflation.
Three-month copper on the London Metal Exchange had slipped 0.8% to $9,342 a tonne by 1600 GMT, the third straight day of losses.
LME copper has been trending lower since touching a record peak of $10,747.50 a tonne in May, but is still up 21% so far this year.
“Today the main focus of the market is on the Fed. We have low volumes because people are waiting for more guidance regading rate policy,” said Xiao Fu, head of commodity market strategy at Bank of China International.
US Federal Reserve Chair Jerome Powell began two days of grilling by US lawmakers on Wednesday by saying US monetary policy will offer “powerful support” to the economy “until the recovery is complete”.
His testimony came on the same day that data showed US producer prices posted the biggest annual increase in more than 10-1/2 years.
A dip in physical demand in top metals consumer China was also weighing on the market after China’s copper imports fell for a third straight month in June.
“The high copper prices are having an impact on demand, which has reduced some of the downstream orders and we are seeing that in the lower Chinese import numbers in June,” Fu said.
The most-traded August copper contract on the Shanghai Futures Exchange closed down 0.4% at 68,870 yuan ($10,637.28) a tonne.
Tin was the only LME metal in positive territory after tin and zinc smelters in Southwest China’s Yunnan province received notices asking them to reduce power use by 25%, a consultancy said. Tin climbed 0.7% to $32,600 a tonne while zinc gave up earlier gains and was down 0.3% to $2,924.50.
Fund managers have been reducing their exposure to copper as the market heads into what is normally a seasonally weak spot for demand.
LME aluminium fell 0.4% to $2,526 a tonne, lead dropped 0.7% to $2,296 and nickel shed 1% to $18,600.