LONDON: Copper prices crept lower on Tuesday, pressured by a firmer dollar, amid uncertainty over a potential global recession and demand in top metals consumer China.
Three-month copper on the London Metal Exchange (LME) slipped 0.5% to $9,313 a tonne by 1710 GMT, having surged 13% since Jan. 5.
“You could argue that it would be a good time to see some profit-taking,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“But the fact that it’s not emerging means the market is keen on holding onto the longs and waiting for the next move, which will have to be confirmed by an actual pick-up in demand from China.” Volumes were thinner than usual because Chinese markets were closed for the Lunar New Year holiday.
Physical copper consumption has been weak in China, but investors are betting that the recent lifting of COVID-19 controls will boost activity and demand in coming months.
The dollar index extended gains after US data, making dollar-priced commodities more expensive for buyers using other currencies.
The data showed US business activity contracted for the seventh straight month in January, but also indicated input prices for both services firms and goods producers rose month-over-month for the first time since May.
That could encourage further aggressive rate hikes by the Federal Reserve, an economist said. LME nickel jumped 2.6% to $28,850 a tonne after Russian metals producer Norilsk Nickel said it expects its nickel production to fall this year.
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