LONDON: Copper prices fell on Thursday as the dollar surged to its highest level since 2002 after disappointing industrial data from Germany, the latest in a slew of weak economic readings from major nations.
Benchmark copper on the London Metal Exchange (LME) was down 0.3% to $9,445 a tonne by 1650 GMT, having climbed as high as $9,770. A stronger dollar makes assets priced in the greenback less attractive to buyers holding other currencies.
The metal, which is used a gauge for global economic health, was on track for its third weekly decline.
German industrial orders fell more than expected in March, driven mainly by a reduction in orders from abroad as the war in Ukraine hit manufacturing demand in Europe’s biggest economy, data showed on Thursday.
The data followed on the heels of sombre manufacturing activity data in China, the world’s top metals consumer, and the United States in April, clouding the outlook for base metals demand.
“Demand in China has been slowing; property and auto are the key concerns,” analysts at Bank of America said as they lowered their 2022 price forecast for copper by 4.3% to $9,999 a tonne.
The move to a lower-carbon economy will, however, require more copper and support prices in the long term, the bank said.
DOVISH: Preventing further losses in metals was a less hawkish tone from the Federal Reserve regarding upcoming US interest rate increases.
That stance led to an earlier risk rally in equities and commodities, said Amelia Fu, Bank of China International’s (BOCI) head of global commodities strategy.
INVENTORIES: Copper stocks in LME-approved warehouses rose by 14,325 tonnes to 168,800 tonnes. Inventories have more than doubled from February, when they reached their lowest level since 2005.
POSITIONS: Funds are betting that copper will fall, as evidenced by rising short positions in Comex copper, said brokerage Marex.
As of May 2, the Comex copper short position was the largest since April 2020, totalling 24,000 lots, or 13.5% of open positions, it said.
OTHER METALS: LME aluminium fell 0.8% to $2,929 a tonne, zinc slipped 2.1% to $3,880, lead shed 0.1% to $2,279, tin fell 0.1% to $40,595 and nickel was down 1.9% at $30,070.