LONDON: Copper prices hit a one-week low on Wednesday as traders trimmed positions ahead of a decision on US interest rates from the US Federal Reserve, while demand from top metals consumer China was muted by the recent copper rally.
Benchmark three-month copper on the London Metal Exchange lost 1.6 percent to USD9,963 a metric ton in official open-outcry trading, remaining above the 21-day moving average, which supports it at USD9,910.
The metal, used in power and construction, hit USD10,192.50, its 15-month high, on Monday. “China has been on the copper offer this week,” said
Alastair Munro, senior base metals strategist at Marex. “But it has really been an absence of any systematic bid and even bearish mean reversion sell signals which have triggered weakness across the complex.”
China’s copper production rose 15 percent year on year in August, state data showed on Wednesday.
Traders await clarity from the Fed not just on the expected rate cut but also on the trajectory of future policy, said Neil Welsh, head of metals at Britannia Global Markets.
“With the dollar already down around 10 percent year-to-date and labour data softening, traders are looking for signals that tonight’s cut could be the first in a series,” he added.
Among other LME metals, aluminium lost 1.3 percent to USD 2,683 a ton in official activity.
It hit a six-month high of USD2,720 on Tuesday, when the premium of the cash aluminium contract against the three-month one touched USD16 a ton, the highest since March.
That indicated tightness in the LME system during the current settlement week, when short position holders had to cut or roll over their contracts.
The premium for buying aluminium tomorrow and selling it the day after – known as tom-next – fell to zero on Wednesday from USD13 a ton on Tuesday.
There was one long position holder with more than 40 percent of LME
September futures’ open interest alongside several short positions, according to the LME data.
LME zinc shed 1.3 percent to USD2,952, lead eased 0.6 percent to USD1,998.5, tin slid 1.5percent to USD34,365, while nickel fell 1.2 percent to USD15,250.
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