LONDON: Copper prices fell in London on Thursday as the U.S. dollar hit a seven-week high and inventories in warehouses registered with the London Metal Exchange (LME) continued to rise.
Three-month copper prices on the LME were down 0.9% at $8,230.5 a tonne by 1035 GMT. On Wednesday, copper hit $8,088.5, its lowest since Nov. 30 and then turned to growth, fuelled by profit-taking in bets on lower prices known as short positions.
“Copper has given back some of yesterday’s strong gains led by short-covering, as the dollar continues higher, with the dollar index trading at the highest since March,” said Ole Hansen, head of commodity strategy at Saxo Bank.
The metal, which is used in electrical wiring, saw a rally early this year, hitting a seven-month high of $9,550.5, as China re-opened following stringent COVID-19 curbs.
But the optimism faded when demand growth by the world’s top consumer of metals fell short of initial high expectations.
Copper flat as China demand concerns counter US debt-ceiling optimism
This week’s Chinese data showed April industrial output and retail sales grew slower than expected, reinforcing concerns of a spillover into the wider global economy.
Further pressuring prices, on-warrant copper stocks in the LME-registered warehouses climbed to a six-month peak of 90,300 tonnes after arrivals of 3,900 tonnes.
Making dollar-priced metals more expensive for buyers holding other currencies, the U.S. currency hit a seven-week high after President Joe Biden and top U.S. congressional Republican Kevin McCarthy worked to avoid a damaging debt default.
Among other metals, LME aluminium was stable at $2,296 a tonne, nickel fell 0.6% to $21,205, zinc lost 1.3% to $2,492.5, lead was down 0.4% at $2,046.5, while tin added 0.4% to stand at $24,900.
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