LONDON: Copper prices slipped on Friday on a firmer dollar and loan data from the world’s leading metals consumer China, but losses were cushioned by expected monetary easing in China.
Benchmark copper on the London Metal Exchange (LME) was down 0.3% at $8,334 a metric ton at 1700 GMT, having retreated from a session high of $8,448.
Growth in outstanding total social financing (TSF), a broad measure of credit and liquidity in China and viewed as a key gauge of metals demand, fell to 1.94 trillion yuan ($270.72 billion) from 2.45 trillion yuan in November.
“The market rolled back after the Chinese loans data,” one copper trader said, adding that he expected metals market activity to become increasingly subdued ahead of the Chinese Lunar New Year holiday in February.
The US dollar index has risen by about 0.9% this month on stronger-than-expected US data and reduced likelihood of imminent interest rate cuts by the Federal Reserve.
A stronger US currency makes dollar-priced metals more expensive for holders of other currencies, which would curb demand. Supporting the market, however, was expectations that China’s central bank will ramp up liquidity and cut a key interest rate when it rolls over maturing medium-term policy loans on Monday as authorities try to put the shaky economy on a more solid footing.
“Main drivers for the market at the moment include the US macro situation, US interest rates and the dollar,” said BNP Paribas analyst David Wilson. “The market isn’t particularly concerned about copper supply at the moment. Copper isn’t tight, look at the spreads.”
Spreads are the discounts for cash copper against the three-month copper, which this week hit a record high of $108 a ton. The discount was last at $97 a ton. In other metals, aluminium eased 0.6% to $2,222.50 a ton, lead dipped 0.1% to $2,094 and nickel retreated 0.6% to $16,320 while tin gained 1.7% at $24,965 and zinc advanced 0.7% to $2,519.50.
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