LONDON: Copper prices eased on Monday as higher oil prices stoked fears about inflation and higher interest rates in the United States and as manufacturing activity in top consumer China stalled.
Copper on the London Metal Exchange (LME) was down 0.9% at $8,909.50 a tonne at 1613 GMT. Over the last couple of weeks prices of industrial metals have been supported by an idea that US Federal Reserve rate hikes would not be as aggressive as previously anticipated.
Oil prices surged after a surprise announcement by OPEC+ to cut more production jolted markets and fuelled fears of stronger price pressures, which has raised the chances of higher US rates in May.
The price rise “raises recessionary fears on a night when China’s Caixin PMI data is released, coming in worse than expected,” said Al Munro at brokers Marex.
The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) for China fell to 50.0 in March, amid slowing production and weaker global demand.
However, support for copper comes from falling stocks in LME registered warehouses, which at 63,850 tonnes have dropped more than 15% over the past two weeks.
Cancelled warrants at around 29% of the total suggest another 18,500 tonnes of copper is due to leave the LME system.
Elsewhere, aluminium prices hit a one-month high of $2,434 a tonne due to worries that higher oil prices could translate into higher prices of electricity, a key component of the aluminium production process.
Traders say aluminium’s price moves could be limited on the upside at around $2,435 where the 100-day moving average currently sits, while support is at the 200-day moving average around $2,390.
By 1613 GMT, however, three-month aluminium was down 1% at that support level of $2,390 a tonne.
In other metals, zinc slipped 1.2% to $2,886.50 a tonne, lead gained 0.4% to $2,115, tin rose 0.1% to $25,850 and nickel was down 2.1% at $23,340.
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