BEIJING: Copper prices were little changed on Wednesday amid cautious sentiment ahead of the US Federal Reserve’s interest rate decision, while being underpinned by firm market fundamentals.
Three-month copper on the London Metal Exchange was unmoved at $8,759.50 a tonne by 0432 GMT, having recovered this week from a two-month low hit last Wednesday due to a large sell-off over a banking crisis, as regulators moved to rescue First Republic Bank and European lender Credit Suisse.
The Fed began a two-day meeting from Tuesday, and investors are divided about whether the central bank will raise interest rates by 25 basis points on Wednesday or place a pause on hikes for the month.
The dollar was pinned near five-week lows on Wednesday, making it more attractive for non-dollar holders to buy the greenback-priced commodity.
The most-traded May copper contract on the Shanghai Futures Exchange inched up 0.7% to 67,850 yuan ($9,853.75) a tonne. Despite macro uncertainty, markets were also aided by firm fundamentals as demand from top consumer China improved, against the backdrop of constrained supply.
One signal of a brightening picture in China is that the 1-month price on SHFE has moved back above the equivalent LME price, metal derivatives broker AMT said in a note.
The reopening of arbitrage window in China will likely cut its overseas shipments and help to underpin LME prices in the weeks ahead, it added.
LME aluminium added 0.3% to $2,273 a tonne, zinc dipped 0.1% to $2,863 and lead gained 0.5% to $2,104, while tin was down 0.1% to $23,010.
SHFE aluminium edged up 0.1% to 18,195 yuan a tonne, nickel eased 0.5% to 173,950 yuan, zinc fell 0.8% to 22,355 yuan, lead dipped 0.1% to 15,340 yuan and tin rose 0.6% at 186,670 yuan.
Chinese spot treatment charges for zinc concentrate slipped from their highest in more than two years in March, and will likely fall further on high smelter utilisation rates and a demand recovery in its biggest consuming market.