LONDON: Copper prices slipped from their highest in more than three weeks on Tuesday, pressured by a firm dollar and worries about a potential recession sparked by interest rate hikes to fight inflation.
Copper has recently been caught between bullish and bearish influences and prices earlier advanced on investor hopes that China’s lifting of lockdown restrictions would boost demand.
Three-month copper on the London Metal Exchange had slumped 0.8% to $9,468.50 a tonne by 1600 GMT, after earlier climbing to its highest since May 5 at $9,591.50.
US Comex copper slipped 0.1% to $4.30 a lb.
Shanghai authorities removed lockdown fences on Tuesday, preparing to lift a two-month lockdown at midnight, while China’s cabinet announced a package of 33 stimulus measures to revive its pandemic-ravaged economy.
“The news from China is just enough to create a refocus in the market towards a possibility of a pick up in demand,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“There’s a slowdown coming, but the question is whether it will be to the extent that it will have a negative impact on global demand,” Hansen added.
A surge in oil prices fanned fears of further acceleration in global inflation that would lead the US Federal Reserve and other central banks to keep raising interest rates.
Copper slid 18% in about two months after touching a record high of $10,845 a tonne in early March on fears about a slowdown in China and inflation disrupting economies elsewhere.
LME copper is on track to fall for a second straight month, down 3.1% in May.
But weak metal inventory levels were a sign of underlying strength in the market, Hansen added.
“It’s quite telling that despite worries about growth and demand, there hasn’t been a pick-up of inventory levels at a time of year when you would expect some stock build.” * Copper output in Chile, the world’s largest producer of the metal, fell 9.8% year-on-year to 421,742 tonnes in April, data showed.
China’s factory activity contracted at a slower pace in May, as restrictions on some plants were lifted.
The dollar rose against its rivals, making greenback-denominated metals more expensive for buyers using other currencies.
COLUMN-China a net exporter of zinc for the first time since 2014: Andy Home * LME tin dipped 0.04% to $34,570 a tonne and was set to tumble 14% in May, its worst monthly performance since 2011.
LME aluminium shed 3.4% to $2,790 a tonne and nickel dropped 2.9% to $28,440, but zinc rose 0.1% to $3,904, while lead was flat at $2,175.
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