LONDON: Copper prices slipped on Friday after U.S. consumer prices rose in line with expectations, dampening moves by investors to buy commodities as a hedge against inflation.
Three-month copper on the London Metal Exchange (LME) had declined 0.4% to $9,498 a tonne by 1600 GMT.
“There are quite a few people who buy commodities as a hedge against inflation,” said Julius Baer analyst Carsten Menke in Zurich.
While U.S. inflation data showed the biggest annual gain in more than 39 years, many investors had been bracing for much higher numbers.
Menke said he did not agree with the strategy of using commodities as insurance against rising prices because firmer copper and other raw materials prices often are the cause of inflation.
Top metals consumer China is the main driver of metals prices and two of three pillars of Chinese copper demand - property and infrastructure - were lagging, he added.
“Prices should hover around this level, $9,500, and maybe trend a little bit lower, but I don’t see why prices should move higher from here,” he added.
China’s major copper smelters boosted output by 1.3% in November from the previous month as fewer producers carried out maintenance and power supply shortages eased, state-backed research house Antaike said. LME zinc gained 0.5% to $3,328 a tonne even though LME daily inventory data showed a jump of 14,025 tonnes to 164,425 tonnes, interrupting a months-long trend of outflows. LME aluminium lost 0.5% to $2,612.50 a tonne, nickel gave up 0.3% to $19,810, tin dipped 0.2% to $39,435, but lead rose 0.4% to $2,293.50.
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