LONDON: Copper prices slipped on Monday as worries about demand in top consumer China dominated sentiment, though the prospect of U.S. interest rates peaking at a lower level than previously expected offered support.
Benchmark copper on the London Metal Exchange (LME) was down 0.5% at $7,595 a tonne by 0927 GMT.
China’s weak property and industrial sectors, accounting for a large proportion of industrial metals demand, have dented copper and aluminium prices in recent weeks.
Persistent COVID-19 curbs in China, meanwhile, are also weighing on industrial metals.
“Let’s see what Chinese data shows us; it doesn’t look promising, we haven’t yet seen the full picture of the damage from the lockdowns,” one metals trader said. “Chinese stimulus hasn’t really done much for metals demand.”
A Reuters survey showed that China’s export growth is likely to have lost steam in August as global demand weakened, with imports expected to have also slowed because of sluggish consumption.
In the United States, the Federal Reserve is expected raise interest rates sharply in the coming months to cool inflation, but rising unemployment has traders betting that borrowing costs next year may not end up quite as high as previously projected.
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This would be positive for growth and demand generally. It could also cap the dollar, making dollar-priced commodities more attractive to buyers with other currencies.
“The dollar has been a major drag on metals,” the trader said, adding that some support has come in the form of low inventories and supply constraints resulting from soaring energy prices.
Low availability of stocks in LME-registered warehouses have been a theme for many months. For copper, it has created a premium for cash metal over three-month contracts.
Rising energy prices, which have ramped up to record highs since Russia invaded Ukraine in February, have curtailed aluminium production in Europe.
Aluminium was flat at $2,295.5 a tonne, zinc gained 1.7% to $2,295.5, lead was up 0.1% at $1,891, tin rose 1.4% to $21,450 and nickel added 2.6% to $21,060.
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