BEIJING: Copper prices in London drifted lower on Wednesday as hawkish comments from the U.S. Federal Reserve Chair outweighed expectations of healthy demand from top consumer China.
Three-month copper on the London Metal Exchange dipped 0.2% at $8,750 a tonne by 0435 GMT, extending losses in the previous session.
Fed Chair Jerome Powell on Tuesday said the U.S. central bank is likely to increase interest rates more than previously anticipated to tame inflation.
LME copper may retest support at $8,708 this week
Powell’s remarks also pushed the dollar to a three-month month high against a basket of currencies on Wednesday, making it less attractive for non-dollar holders to buy the greenback-priced commodity.
The most-traded April copper contract on the Shanghai Futures Exchange lost 1% to 68,870 yuan ($9,875.39) a tonne.
“The lowered prices bring buy in opportunity, but we are still holding a cautious optimistic view of China’s demand,” a Shanghai-based futures trader said.
Demand for copper, a metal widely used in the power, construction and transportation sectors, is expected to pick up amid a recovery in manufacturing activities in China.
A moderate growth in demand this year was expected by participants, underpinned by a relatively more stable property sector.
Sales of new and second-hand commercial housing in China ended 13 months of falls in January and February, the minister of housing said on Tuesday, on the sidelines of an annual meeting of parliament.
Improved spot buying, together with lower imports in recent months, resulted in a gain in spot premium, up 25 yuan a tonne to 30 yuan on Tuesday, as assessed by Shanghai Metals Market.
LME aluminium eased 0.2% to $2,346.50 a tonne, tin shed 0.6% to $24,040, lead dipped 0.1% to $2,085, while zinc added 0.1% to $2,955.50.
SHFE zinc declined 0.7% to 23,270 yuan, tin was down 1% at 197,530 yuan, aluminium slid 0.5% to 18,540 yuan, and nickel shed 0.6% up to 188,430 yuan a tonne.
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