LONDON: Copper prices fell on Tuesday due to concerns about demand in top metals consumer China and high inventories on top of persisting pressure from a strong dollar and higher-for-longer interest rate expectations.
Benchmark copper on the London Metal Exchange (LME) was down 0.5% at $8,102 a metric ton by 1629 GMT. The metal used in power and construction touched its lowest since May 31 at $8,068 earlier in the session and lost 2.2% last week.
“Strength in the US dollar, weak risk appetite coupled with concerns over China’s property sector amidst a challenging global growth backdrop are weighing on the base metals complex,” said Standard Chartered analyst Sudakshina Unnikrishnan.
China’s top copper smelters on Friday maintained their fourth-quarter guidance for copper concentrate processing treatment and refining charges at a six-year high, indicating expectations of ample supply in the market.
This also hit trader confidence and curbed restocking activity ahead of a week-long holiday in China starting on Sept. 29, said SP Angel metals associate Arthur Parish.
“With sentiment as negative as this, markets could all use a holiday as well,” Marex analyst Edward Meir said in a note, referring to broader commodities markets hit by the combination of higher interest rates and the strong dollar, “typically anathema to commodity bulls.” The dollar index hit a 10-month high, making dollar-priced metals less attractive for holders of other currencies.
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