LONDON: Copper prices pulled back on Tuesday, pressured by a firmer dollar, lower risk appetite and as investors locked in profits from a rally to a record high touched in the previous session.
Benchmark three-month copper on the London Metal Exchange fell 0.4 percent to USD11,207 a metric ton in official open-outcry trading, having hit a record peak of USD11,334 on Monday.
LME copper has gained 27 percent so far this year, mainly due to worries about potential shortages. “We’re pausing a bit today after we saw the dollar recover somewhat and lower risk appetite in general,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Stocks made muted gains and traders were wary on Tuesday, following a slide in cryptocurrencies and a global bond sell-off. The dollar rose against the yen after an auction of Japanese government debt drew solid demand.
A firmer dollar makes commodities priced in the US currency more expensive for buyers using other currencies. “Copper remains in a buoyant mood, but we’re in need of a correction, and as long as we hold USD11,000, we’re poised for higher prices as the outlook for next year points to a tight market,” Hansen said. More copper has been flowing to the US as investors reap profits from arbitrage between the US Comex exchange and the LME by delivering to warehouses in the US.
The market is also assessing the impact of major Chinese smelters’ plan to cut production by 10percent next year. Smelters’ plan to cut output reinforced the outlook that the supply of refined copper will turn tight, analysts at Chinese broker Jinrui Futures said in a note. The most-traded copper contract on the Shanghai Futures Exchange closed daytime trading nudging 0.1percent higher at 88,920 yuan (USD12,574.60) per ton, after touching a record high of 89,920 yuan a ton earlier.
Among other metals, LME aluminium gave up 0.2 percent to USD2,887 a ton, zinc slipped 0.4percent to USD3,084, nickel shed 0.2 percent to USD14,900 and tin dipped 0.1 percent to USD39,115 while lead added 0.2 percent to USD2,005.
Comments
Comments are closed for this article.