LONDON: Copper prices came under pressure on Monday as the dollar strengthened and worries about Chinese demand resurfaced after its central bank surprised markets by leaving interest rates unchanged.
Elsewhere, zinc prices on the London Metal Exchange (LME) jumped to $2,615 a metric ton, the highest since Jan. 3, after Nyrstar said it will suspend zinc smelting operations at its Dutch plant in Budel in the second half of January.
Traders said copper firmed in the European afternoon due to funds cutting short positions as prices approached resistance at $8,390, where the 50-day and 200-day moving averages are converging.
Benchmark copper was up 0.5% at $8,381 per ton at 1702 GMT after falling as far as $8,308.
“The dollar is a major factor for base (metals). The market was disappointed by lack of action from China’s central bank,” one copper trader said, adding that he expected subdued activity because of a US holiday.
China’s central bank left the medium-term policy rate unchanged on Monday, defying market expectations for a cut as a weaker currency limited the scope of near-term monetary easing to boost the economy.
A stronger US currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand.
Base metals markets are awaiting Chinese data on investment, industrial output, GDP and house prices on Wednesday for clues on future demand prospects in the world’s biggest metals consumer.
Nyrstar is suspending zinc production at Budel because of high energy costs and difficult market conditions.
The news triggered a $100 rally in zinc, according to Marex, which also said prices later slipped on the view that any production losses would not be enough to dent the market surplus which zinc appears to be facing in 2024.
Budel’s capacity is 315,000 metric tons of zinc a year.
Zinc was up 1.8% at $2,559 a ton.
In other metals, aluminium slid 0.7% to $2,204, lead gained 1% to $2,111, tin was up 0.4% at $24,730 and nickel retreated 0.7% to $16,220.
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