LONDON: Copper prices edged down on Thursday as a firmer dollar and risk reduction ahead of a long Chinese holiday weekend weighed on sentiment, although worries over supply disruptions at major Chilean mines limited the losses.
Benchmark three-month copper on the London Metal Exchange dipped 0.2percent to USD14,639.50 a metric ton in official open-outcry trading.
Copper, used in power and construction, is up 9percent so far this quarter, having hit a record high of USD14,875 a ton two weeks ago. Financial markets in top metals consumer China have closed for the Mid-Autumn Festival. Trading will resume on Monday.
“China is out, but really it’s the macro weight,” said Alastair Munro, senior base metals strategist at Marex. The dollar held near a two-month high after a sharp rally, fuelled by expectations of additional Federal Reserve interest rate hikes.
A stronger US currency makes dollar-priced metals more expensive for buyers using other currencies, while the prospect of higher borrowing costs affects sentiment towards growth-dependent metals such as copper.
China’s stock markets saw their biggest one-day decline in a month on Thursday, as investors were sceptical that a meeting between US President Donald Trump and Chinese President Xi Jinping in Washington would deliver a broader breakthrough.
Meanwhile, the premium of the LME cash copper contract over the three-month benchmark widened to USD107.5 a ton, the highest since September 1, from zero a week ago, signalling tightness for nearby supply.
Adding to supply concerns, operations at BHP’s Escondida mine in Chile, the world’s largest copper mine, were suspended on Wednesday after a worker was killed in an accident.
Separately, two unions representing workers at Antofagasta Minerals’ Centinela copper mine in Chile called on workers to hold a strike vote, adding to concerns amid ongoing contract negotiations with workers at Escondida.
LME zinc rose 0.3percent in official activity to USD3,914.50 a ton, erasing earlier losses, after Nyrstar said it was launching a strategic review of its loss-making Budel zinc smelting operations in the Netherlands.
LME aluminium dipped 0.1percent to USD3,252 and nickel also slipped 0.1percent, to USD16,460, while lead added 0.2percent to USD1,924 and tin rose 0.5percent to USD54,150.
Comments