Copper slips ahead of Fed rate decision, aluminium rises on Gulf fighting

LONDON: Copper fell on Wednesday in cautious trade ahead of a Federal Reserve interest rate decision later in the day and signs of easing supply tightness in the world’s biggest consumer China, while aluminium rose in response to renewed fighting in the Middle East. Benchmark three-month copper on the London Metal Exchange was down 0.6percent at USD13,607 a metric ton in official open-outcry trading, but held above the 50-day moving average, providing support at USD13,576. The US dollar was near one-month highs as investors stayed on the sidelines ahead of the Fed’s decision, with markets pricing in a roughly 36percent chance of a 25-basis-point hike.

A strong US currency makes dollar-priced metals more expensive for buyers using other currencies, while the prospect of higher rates weighs on demand expectations for growth-dependent metals. Adding further pressure on copper as well as on zinc, Asian stocks extended a selloff caused by worries about AI valuations.

The Yangshan copper premium, a gauge of interest in importing metal to China, stabilised at USD112 a ton, indicating easing demand compared with a week ago, when it hit USD115, the highest since November 2022. Available LME copper stocks edged up to 101,975 tons as 975 tons were put back on warrant in the LME-registered warehouses in Taiwan. The available stocks remain at the lowest since January after heavy cancellations earlier this month, keeping the premium of the cash LME copper contract over the three-month forward at USD30 a ton vs a discount of USD49 at the start of July. In other LME metals, aluminium rose 0.9percent to USD3,176 a ton in official activity as tensions in the Middle East escalated, inflating worries about metal supplies from the Gulf region and driving oil prices up sharply.

Available LME aluminium stocks are at a 16-month low of 245,350 tons, and are dominated by Russian-made metal, which many traders avoid. LME zinc was steady at USD3,578.50 a ton, lead rose 1percent to USD1,913 while tin added 1.1percent to USD54,175 and nickel gained 1.3percent to USD17,190.