LONDON: Copper eased on Wednesday after notching a three-week high earlier in the session as US inflation data put an interest rate hike this month back on the radar, while aluminium slipped below the USD3,000 mark for the first time since February.
Benchmark three-month copper on the London Metal Exchange was down 0.3 percent to USD14,532 a metric ton as of 1320 GMT. It earlier rose to USD14,700, its highest since September 23.
US consumer prices accelerated in September amid a surge in gasoline costs. The data prompted traders to reassess the outlook for Federal Reserve policy, with the CME’s FedWatch tool showing the probability of a 25-basis-point rate hike in late October doubling to about 44 percent.
Higher interest rates are usually negative for industrial metals prices because they tend to slow economic growth and mean higher financing costs.
The possibility of a strike at BHP’s Escondida copper mine, the world’s largest, has been supporting copper prices, but two sources told Reuters on Wednesday that the supervisor’s union and company representatives have reached a preliminary agreement.
Chile’s Centinela copper mine and two striking unions returned to the negotiating table on Tuesday, while Codelco has partially suspended operations at its El Teniente mine after a fatal landslide.
StoneX senior metals analyst Natalie Scott-Gray said copper supply risks were skewed to the upside, especially with El Nino and its potential impact on mine production, while investor bets on the metal were also keeping prices elevated.
“Copper’s got its own geopolitical risk premium and that is what’s underpinning those prices,” Scott-Gray said on a webinar.
Aluminium was down 1.2 percent at USD3,001.50, after ducking below the USD3,000 mark for the first time since February 6 on signs of emerging oversupply.
Zinc gained 0.2 percent to USD3,737.50, lead was flat at USD1,902, nickel nudged up 0.2 percent to USD15,605 and tin fell 2.4 percent to USD50,505, after hitting its lowest since June 30.
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