Copper falls as dollar rises

LONDON: Copper prices fell in London on Tuesday as investors locked in profits from the metal’s recent rally and the dollar rose ahead of the US Federal Reserve decision on rates. Three-month copper on the London Metal Exchange (LME) fell 1.2% to $8,978 per metric ton in official open-outcry trading.

Copper hit $9,164.5, its 11-month high, in the previous session buoyed by China’s above-consensus industrial production data and fund buying. Its 7%-growth over the last month has seen it breaking above all its major technical moving averages.

“The decline today is mostly profit taking and the dollar index strength,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International. The US currency index was trading near its highest level since the start of March, making dollar-priced metals more expensive for buyers using other currencies.

“Elevated rates and a stronger dollar have been a drag on industrial metals over the past two years,” said ING commodities analyst Ewa Manthey. “The focus this week will be on the Fed meeting for more clues on the central bank’s monetary policy.”

Also weighing on sentiment was the demand outlook for copper, used in power and construction, in top consumer China. “After recent price rallies, some of copper wire companies in China prefer delaying their purchases. They would de-stock for the time being and wait for a retreat in copper prices,” Xiao Fu said.

Among other base metals, tin and nickel took a hit after a supply disruption in major producer Indonesia showed signs of easing as the top tin miner there resumed exports. LME tin dropped 2.8% to $27,900 and nickel fell 1.1% to $17,680 in official activity.

So far this year, Indonesia has issued mining quotas for around 70% of the country’s 2024 nickel ore production estimate. It also provided some quotas for tin ore, copper ore and bauxite, a raw material for aluminium production. LME aluminium fell 1.0% to $2,254 a ton, zinc fell 1.0% to $2,507 and lead eased 0.1% to $2,087.5.