LONDON: Prices of copper and other industrial metals eroded on Thursday, weighed down by a stronger dollar and worries about global growth as the Middle East conflict rumbles on.
Benchmark three-month copper on the London Metal Exchange was down 0.04 percent at USD14,126.50 a metric ton by 1600 GMT, having dipped by 0.2 percent in the previous session. LME copper jumped to a six-month high a week ago on tightening inventories outside the United States.
“It’s clear that there’s tightness in the market. But there’s also a lot of question marks about the global economy and the dollar is taking the edge off prices,” said Nitesh Shah, commodity strategist at WisdomTree.
“As long as the war is continuing in the Middle East, there’s always that risk of the economy hanging over and demand being somewhat weaker than initially expected.” Iran and the US remain at loggerheads over efforts to agree on a permanent end to the war, according to a senior Iranian source.
At the same time, the dollar index touched its highest in nearly two weeks on Thursday, making commodities priced in the US currency more expensive for buyers using other currencies.
The most-traded copper contract on the Shanghai Futures Exchange fell 0.7 percent to 107,410 yuan a ton as signs of demand faltered in the world’s biggest metals-consuming nation.
The Yangshan copper premium, a barometer for China’s import demand, fell to its lowest in four weeks at USD95 a ton. LME aluminium dropped 1.7 percent to USD3,253 a ton, the second consecutive decline after a seven-session rally. Improving supply prospects from the Middle East, a major global aluminium supplier, and the expected return of some war-damaged smelting capacity helped relieve supply concerns.
“There is more uncertainty about a peace deal, although smelters in the Gulf have been shipping material out through Saudi Arabia and Oman,” said David Wilson, head of commodity strategy at BNP Paribas.
Among other metals, LME zinc lost 0.4 percent to USD3,744 a ton, lead gave up 1.3 percent to USD1,884.50, nickel shed 0.9 percent to USD16,795 while tin was little changed at USD55,815.
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