LONDON: Copper prices retreated on Monday as the dollar strengthened, with further pressure coming from an increase in stocks in London Metal Exchange (LME) warehouses and resurfacing doubts over Chinese demand prospects.
Benchmark copper on the LME was trading 1.3% down at $8,500 a metric ton by 1031 GMT. Prices of the metal used as a gauge of economic health touched a four-month high last week at $8,640, a gain of nearly 10% since Oct. 23.
A stronger US currency makes dollar-priced metals more expensive for holders of other currencies, which weighs on demand. This is a relationship used by funds that trade using buy and sell signals generated by numerical models.
“Copper and other industrial metals are linked to the wider macro picture. The market is correcting,” said Alastair Munro, base metals strategist at Marex.
Stocks of copper in LME warehouses have fallen in recent weeks, but on Friday they rose and at 174,900 tons they are nearly 225% above the levels in mid-July.
However, cancelled warrants - metal earmarked for delivery - at 19% of the total, compared with 5% three weeks ago, suggests that some copper is due to leave the LME system. China has reported mixed factory activity data for November, raising doubts about demand.
Trade and inflation data is due later this week. On the technical front, support for copper stands at $8,445, the 200-day moving average, while resistance is at last week’s $8,640 high.
Some support for copper comes from supply disruptions in Panama, where First Quantum has suspended operations at its Cobre mine, which accounts for 1% of global supplies.
Elsewhere, nickel prices rose as funds and traders cut short positions after prices hit $15,840, the lowest since March 2021, though expectations of large surpluses triggered fresh selling. Three-month nickel was down 2.7% at $16,570 a ton.
In other metals, aluminium fell 0,7% to $2,193 a ton, zinc ceded 1.4% to $2,474, lead gained 0.5% to $2,130 and tin was up 0.5% at $23,880.
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