London copper prices dropped nearly 1% on Tuesday as a firmer dollar made greenback-priced metals expensive to holders of other currencies, while markets continued to process the sudden collapse of US regional banks.
Three-month copper on the London Metal Exchange dropped 0.9% to $8,854 a tonne by 0218 GMT, while the most-traded April copper contract on the Shanghai Futures Exchange fell 0.5% to 68,630 yuan ($9,998.54) a tonne.
The dollar edged higher, having dropped to near a one-month low in the previous session as traders and investors expect a slowdown in interest rate hikes following the collapse of the banks.
Fears of a US banking crisis were intensified by the collapse of lenders Silicon Valley Bank (SVB) and Signature Bank even as President Joe Biden pledged to take action to ensure the safety of the banking system.
Still, green shoots of improved copper demand in top consumer China cushioned the drop in prices.
Yangshan copper premium rose to $25 a tonne on Monday, its highest since March 1, indicating improving demand for imported copper into China, albeit still far below some $150-a-tonne premium hit last October.
SHFE front-month copper contract has been trading at a premium over the third-month contract since Monday, switching from a discount that has lasted for most of this year, indicating tightening nearby Chinese supply.
Analysts anticipated Chinese copper demand to improve in late March or from the second quarter, following the easing of COVID-19 restrictions.
LME aluminium was down 0.5% at $2,321.50 a tonne, tin shed 0.9% to $23,005 a tonne, zinc eased 0.1% to $2,945 a tonne, while lead rose 0.3% to $2,089 a tonne.
Copper prices down as markets gauge SVB collapse
SHFE aluminium rose 0.5% to 18,350 yuan a tonne, nickel advanced 0.5% to 178,650 yuan a tonne, zinc increased 0.3% to 22,895 yuan a tonne, lead was up 0.5% at 15,225 yuan a tonne, while tin fell 0.4% to 186,660 yuan a tonne.
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