LONDON: Copper prices were supported by the lower dollar on Monday, but market sentiment was negative due to disappointment with Chinese authorities latest package of measures to boost growth in the world’s top consumer of industrial metals.
Three-month copper on the London Metal Exchange (LME) traded 0.4% higher at $8,273 per metric ton in official rings after three consecutive weeks of losses on concerns about sluggish growth and demand in China and elsewhere.
A declining U.S. currency makes dollar-priced commodities cheaper for holders of other currencies, which could help boost demand and prices of copper and other base metals.
China cut its one-year benchmark lending rate on Monday and surprised markets by keeping the five-year rate unchanged, falling short of market expectations of cuts to both rates.
Copper on track for third straight weekly loss on China economic woes
“Ongoing concerns about China’s economy and property crisis continue to put pressure on the industrial metals complex,” said Ewa Manthey, commodities strategist at ING.
“All eyes are on whether Beijing will roll out more support for its ailing economy.”
Copper used widely in the power and construction industries has also come under pressure from higher inventories in LME approved warehouses. At 95,325 tonnes they have climbed 76% since July 12.
Elsewhere, traders noted a large holding of lead warrants, which has fuelled concern about near-term supplies of lead on the LME market.
This has created a premium or backwardation for the cash lead contract over the three-month contract. Earlier on Monday, the premium at $18.50 a ton is the highest since early July and compares with a discount only a week ago.
Three-month lead was down 0.2% to $2,145 a tonne.
In other metals, aluminium price was down 1% at $2,122 a tonne, zinc retreated 0.4% to $2,292, tin dipped 0.4% to $25,150 and nickel was little changed at $20,125.
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