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Demand doubts and dollar weigh on copper

  • Benchmark copper on the London Metal Exchange (LME) traded down 1.4% at $9,337.5 a tonne in official rings after touching its lowest since July 21 at $9,295
Published August 9, 2021
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LONDON: Copper prices fell to their lowest in more than two weeks on Monday as a firm dollar and demand worries weighed on sentiment, but losses were contained by the potential for a strike at the world's largest copper mine.

Benchmark copper on the London Metal Exchange (LME) traded down 1.4% at $9,337.5 a tonne in official rings after touching its lowest since July 21 at $9,295.

"The dollar is one factor behind the selling and the other is Chinese demand," one copper trader said, adding that the rising risks of a strike at the Escondida mine in Chile are raising concerns over supply.

JOBS: The dollar was trading close to four-month highs against a basket of currencies after a robust US jobs report encouraged investors to bring forward their bets on the Federal Reserve reducing its pandemic-driven stimulus.

Copper gains as world's biggest mine prepares for strike

A higher US currency makes dollar-priced commodities more expensive for holders of other currencies, which could subdue demand.

ESCONDIDA: The union representing workers at Chile's Escondida copper mine has instructed its members to prepare for a strike after slow progress in talks being mediated by the government.

The mine accounts for about 4.5% of global copper supplies estimated at roughly 24 million tonnes this year.

DEMAND: Analysts say pent-up Chinese demand since the start of the coronavirus crisis has peaked. They forecast growth to moderate amid supply chain bottle necks and outbreaks of COVID-19 variants.

IMPORTS: China's copper imports in July fell 1% from June, declining for a fourth straight month as high prices, the release of state reserves and increased scrap metal inflows kept buying interest at bay.

DATA: Clues to demand prospects for industrial metals will come from Chinese data over the next few days, total social financing, money supply growth and investment.

LEAD: Low stocks of battery metal lead in LME-registered warehouses and large holdings of LME warrants and cash contracts have fuelled concern about metal availability.

This has created a premium for the cash over the three-month lead contract. The premium - currently about $15 a tonne - rose to nearly $40 last week. Three-month lead rose 0.2% to $2,279.5 a tonne.

OTHER METALS: Aluminium fell 1% to $2,553 a tonne, zinc lost 0.6% to $2,964.5, tin was down 0.5% at $34,579 and nickel ceded 2.3% to $18,774.

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Demand doubts and dollar weigh on copper

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