LONDON: Copper prices hovered around five-month lows as expectations of a deteriorating demand outlook were reinforced by weak manufacturing activity around the world.
Benchmark copper on the London Metal Exchange (LME) was up 0.3% at $8,792 a metric ton in official open-outcry trading, having touched $8,757 on Tuesday for its lowest since Aug. 8. The dollar firmed, resuming a climb that has weighed on metal prices since the end of September. A stronger US currency makes dollar-priced metals more expensive for buyers holding other currencies.
Industrial metals are also expected to come under pressure from uncertainty created by the prospect of US President-elect Donald Trump imposing tariffs on imports, which could start a trade war and hit global economic growth and demand.
“There is a lot of nervousness about what Trump will do when he arrives at the White House,” one copper trader said. “Manufacturing activity and demand aren’t picking up.” Surveys of purchasing managers showed manufacturing activity slowing in China and South Korea in December while European factory activity declined at a faster rate than in November.
Aluminium touched an intra-day high of $2,574.50 a ton on worries about supplies on the LME market. It gained 0.3% to $2,559 in official activity. The concern over supply has narrowed the discount for the cash contract over three-month aluminium to about $23 a ton from more than $40 in December.
Aluminium stocks in LME-registered warehouses are down more than 40% since May last year at 634,650 tons. Cancelled warrants — metal earmarked for delivery — at 54% of the total suggest more aluminium is due to leave LME warehouses over the coming days. On the technical front, upside resistance for aluminium is around $2,575 a ton, the 21-day moving average, with support at the 100-day moving average of $2,553. In other metals, zinc lost 0.9% to $2,951 a ton, lead eased by 0.5% to $1,942, tin fell 2.2% to $28,440 and nickel was down 0.3% at $15,290.
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