LONDON: Copper fell for a fourth straight session on Tuesday, sinking to its lowest in almost two weeks as the dollar strengthened and demand concerns mounted after last week’s run to a record high. Benchmark three-month copper on the London Metal Exchange fell 2.4percent to USD10,624 a metric ton in official open-outcry trading. It touched USD10,577.50, the lowest since October 22 and more than 5percent off its all-time peak of USD11,200 on October 29.
The pullback “showed current fundamentals not being strong enough to sustain higher prices at this time, and the reversal forced recent wrong-footed longs to surrender,” said Ole Hansen, head of commodity strategy at Saxo Bank.
The cash LME copper contract was trading at a USD28 a ton discount to the three-month forward, suggesting no pressing need for short-term metal.
The dollar also weighed on prices as it struck a three-month high. A stronger greenback makes dollar-denominated metals more expensive for holders of other currencies. Furthermore, the yuan’s slide to a two-week low crimped purchasing power in top copper consumer China.
“The outlook now hinges on the broader risk appetite, with near-term support potentially being tested,” Hansen said, noting that the recent uptrend was providing support for copper at around USD10,550. Hopes for a trade deal between the United States and China had helped drive copper’s rally, but a meeting of the two countries’ presidents last Thursday did not yield a conclusive agreement.
“I think optimism surrounding the US-China discussions is fading as the dispute is again postponed rather than solved ... there haven’t really been any concrete resolutions of important issues,” said Thu Lan Nguyen, head of commodity research at Commerzbank.
The LME complex was broadly lower, with aluminium falling 1.4percent to USD2,860.50 a ton, nickel slipping 0.2 percent to USD15,115, lead also losing 0.2 percent to USD2,023 and zinc down 0.6percent to USD3,083, even as the cash zinc contract held a USD174 premium over the three-month forward amid low stocks. Tin was the sole base metal to gain ground, edging up 0.3percent to USD36,140.
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