LONDON: Copper prices slipped on Wednesday as investors sought to digest the latest comments by US Federal Reserve officials on the pace of interest rate hikes.
Aluminium also dropped after inventories surged.
Three-month copper on the London Metal Exchange (LME) edged 0.2% down to $8,906 a tonne by 1700 GMT, having added 0.6% on Tuesday in a bounce from Monday’s four-week low.
Copper, which climbed as much as 1.6% earlier in the session, pared gains after comments by Fed officials and as the dollar strengthened.
Copper had earlier joined oil and equities in a wider upswing on financial markets after investors viewed Tuesday’s comments by Fed Chair Jerome Powell as dovish, focusing on his expectations of slowing inflation.
But on Wednesday New York Federal Reserve President John Williams said the Fed still had more interest rate rises ahead and will need to keep monetary policy restrictive for some time to come.
“The markets are moving on every indication of softening or tightening from the central banks,” said WisdomTree commodity strategist Nitesh Shah.
“There are a lot of questions of whether we’re heading into recession and are central banks tightening too much or are we going to get relief from central banks with lower rates.” The dollar index had eased on the back of Powell’s comments but later reversed and moved into the black, making commodities priced in the US currency more expensive for buyers using other currencies. Aluminium slipped into the red after data showed LME inventories soared 27% to 495,750 tonnes, the highest in about two months, after arrivals in Gwangyang in South Korea.
LME three-month aluminium shed 1.5% to $2,486.50 a tonne.
Last month sources told Reuters that Glencore had delivered 40,000 tonnes of Russian aluminium to Gwangyang. Supply-side issues in copper, including First Quantum Minerals’ suspension of loading operations at a major port in Panama, supported sentiment.
“This might support spot prices, but its actual impact on supply tightness remains to be seen as several smelters will start maintenance in March,” a source at a Chinese copper smelter said.
LME zinc added 0.4% to $3,147.50 a tonne, lead gained 1.4% to $2,127, nickel rose 0.4% to $27,355 and tin climbed 1.2% to $27,405.
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