LONDON: Copper steadied on Tuesday after a sharp sell-off in the previous session, but a strong dollar, elevated oil prices and concerns about demand in top metals consumer China continued to weigh on sentiment.
Benchmark three-month copper on the London Metal Exchange edged down 0.1percent to USD14,394 per metric ton by 0915 GMT. It lost 1.4percent on Monday, hitting its lowest since September 17 on weak Chinese industrial profits data.
Falling industrial metal prices are reflecting signs of deteriorating economic growth because oil above USD100 a barrel is hurting activity everywhere, said Panmure Liberum analyst Tom Price, adding that investors were realising that the Iran war is not going away. “Copper is the only one that’s holding up with some sort of upside risk. And that’s really because the global market has been starved of inventory because it continues to be transferred into the US,” Price said.
LME copper stocks dipped by 875 tons to 251,350 tons, although only around half are available to the market. In the US, COMEX inventories have risen for six straight days to over 700,000 tons for the first time as the possibility of an import tariff next year remains. The dollar index hovered near a two-month high, making greenback-denominated metals more expensive for investors using other currencies. Markets were pricing in more than a 70percent chance of another Federal Reserve rate increase in October, which would be negative for copper.
Traders are also awaiting China’s manufacturing purchasing managers’ data due later this week for further signals on metals demand. Restocking activity ahead of China’s week-long National Day holiday, set to begin on Thursday, has largely been completed, analysts at Chinese broker Galaxy Futures said.
Among other LME metals, aluminium fell 0.5percent to USD3,236 a ton, zinc slipped 0.1percent to USD3,848.50, lead lost 0.2percent to USD1,898, nickel shed 0.8percent to USD16,050, touching its lowest since September 17, and tin was flat at USD53,570.
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