LONDON: Copper prices fell to a one-week low on Friday, pressured by a rising dollar and growing inflation fears, after a stronger-than-expected US jobs report fuelled bets of a rate hike by the US Federal Reserve.
Benchmark three-month copper on the London Metal Exchange was down 3.1percent at USD13,502.50 a metric ton by 1600 GMT, its lowest level since May 28, having broken below support of the 21-day moving average. The most active COMEX July contract lost 3.9percent.
Copper, used in power and construction, is up 9percent so far this year, having hit a record high of USD14,527.5 in January. Analysts at several investment banks upgraded their price forecasts this week, with Citi expecting USD15,000 within six to 12 months.
“High prices will inevitably test demand elasticity, particularly in China where buyers have historically shown sensitivity to elevated prices,” said Ole Hansen, head of commodity strategy at Saxo Bank. The Yangshan copper premium, a gauge of Chinese appetite for imported copper, fell 9percent this week to a five-week low of USD64 a ton. Supporting copper in the short term is a premium of COMEX copper contracts over the LME benchmark ahead of a recommendation from the US Department of Commerce on possible import tariffs, which the market expects by end-June.
This premium is attracting inflows to COMEX copper stocks in the US - already at a record high of 583,055 tons - and tightening availability of visible inventory elsewhere. Available stocks in LME-registered warehouses, according to daily LME data, are at 240,050 tons, the lowest since February 24, and cancelled stocks represent 37percent of the total.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 4percent this week to 169,512 tons, the lowest since end-December, while tin stocks rose 49percent to 12,358 tons.
In other LME metals, aluminium fell 1.8percent to USD3,598.50 a ton, zinc lost 1.8percent to USD3,523, lead eased 0.7percent to USD2,002.50, tin slid 5.9percent to USD52,385 and nickel was down 0.9percent at USD18,515.
Nickel touched lowest since May 19, aluminium and tin hit their lowest since May 20, and lead hit a one-week low. Indonesia’s nickel industry group FINI said production capacity utilisation at some smelters dropped to 76percent from 84percent after nickel ore mining quotas were cut.
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