LONDON: Industrial metals prices eased on Thursday after minutes from the U.S. Federal Reserve’s December meeting indicated that interest rates might rise quicker than expected, dampening risk appetite.
U.S. central bank policymakers said in their meeting last month that monetary tightening could be hastened by a “very tight” job market and rising inflation.
“If central banks are tightening it doesn’t bode well for commodities, as liquidity is the lifeblood of riskier assets,” said independent analyst Robin Bhar.
Despite being pressured by macroeconomic influences, metals such as copper were underpinned by low inventories and the prospect of higher demand from the green revolution, he added.
Benchmark copperon the London Metal Exchange (LME) was down 1.6% at $9,540 a tonne by 1715 GMT.
OTHER ASSETS: The dollar firmed, sapping demand for assets priced in the currency. Elsewhere, the Fed minutes dragged down equities while some government bond yields climbed.
POWER: High power costs in Europe have underpinned prices for power-intensive metals such as aluminium and zinc, where some production has been curtailed.
ALUMINIUM: On-warrant inventories of aluminium in LME-registered warehouse were at 550,700 tonnes, their lowest since December 2005, having shed about 160,000 tonnes in the past two sessions.
Low inventories and higher power prices underpinned LME aluminium, which bucked the wider downward trend in metals to remain flat at $2,923 a tonne.
PREMIUM: China’s Yangshan copper premium for refined copper imports, a good gauge of China’s import demand, slipped to $78 a tonne, its lowest since August.
PROPERTY: Chinese developer Shimao Group has defaulted on a loan, the lender said in a letter seen by Reuters on Thursday, in the latest sign of distress in China’s property sector. The industry is a large consumer of copper.
OTHER METALS: LME zinc lost 0.8% to $3,559 a tonne, lead added 0.9% to $2,307, tin was flat at $39,305 and nickel ceded 1.2% to $20,385.