LONDON: Copper slipped on Tuesday as disappointment with the size of interest rate cuts in top consumer China added to negative sentiment, but a lower dollar helped to support prices of industrial metals.
Benchmark copper on the London Metal Exchange (LME) was down 0.2% at $8,523 a metric tonne at 1006 GMT. Prices of the metal used in the power and construction industries touched $8,634 a tonne on Friday, the highest level since May 10.
China cut its key lending rates on Tuesday, the first such reductions in 10 months to shore up a slowing economic recovery, but the easing was not as large as expected because Chinese authorities are worried about inflating property prices.
“Sentiment is heavier after the easing in China, the main market for copper and other industrial metals,” a trader said, adding that the softer dollar was helping.
A lower U.S. currency makes dollar-priced commodities cheaper for holders of other currencies, which could encourage purchases.
China demand angst pressures copper prices
Traders said a trigger for industrial metals could come with the next batch of Chinese data, which includes surveys of purchasing managers in manufacturing.
On the technical front, first support for copper comes in $8,475 where the 50-day moving average currently sits.
Elsewhere, with settlement due on Wednesday, companies that were short or had sold forward copper, lead, nickel and tin were scrambling to cut or roll over these positions.
This was made more difficult by large holdings of warrants, cash contracts and tom-next contracts – buying tomorrow and selling the day after.
Tom-next copper was last at $8.50 a tonne, lead at $9, nickel at $7 and tin at $70.
Part of the problem behind this flare up in spreads is the low level of metal stocks in LME registered warehouses.
Benchmark three-month aluminium was down 0.7% at $2,226 a tonne, zinc fell 1.6% to $2,397, lead ceded 0.3% to $2,126, tin gained 0.3% to $26,980 and nickel retreated 2.5% to $21,935.
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