BEIJING: Copper prices slid on Monday, under pressure from a firmer US dollar as inflation concerns renewed, while a slowdown in China’s factory activity growth also weighed on investors’ sentiment.
Three-month copper on the London Metal Exchange was down 0.7% to $8,927.50 a tonne by 0558 GMT, and the most-traded May copper contract on the Shanghai Futures Exchange dipped 0.4% to 69,200 yuan ($10,043.10) a tonne.
The US dollar started the week higher, as fears over inflation resurfaced after a surprise announcement by major oil producers to cut production further, with traders wagering the Federal Reserve may need to increase interest rates at its next meeting.
A stronger dollar makes it less attractive for non-dollar holders to buy the greenback-priced commodity.
Copper chalks up second quarterly gain as China recovers
Among other metals, LME aluminium slipped 0.9% at $2,391 a tonne, zinc shed 1.2% to $2,887, nickel lost 0.8% to $23,650, lead dipped 0.2% to $2,102.50 and tin was down 0.7% at $25,655.
The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 50.0 in March, amid slowing production and weaker global demand. That followed February’s reading of 51.6, which indicated the first monthly expansion in seven months.
The reading far missed expectations of 51.7 in a Reuters poll, and echoed slower growth in an official PMI released on Friday.
The 50-point index mark separates growth from contraction on a monthly basis.
In China’s spot market, refined copper premium climbed as suppliers lifted offer prices ahead of the Qingming Festival holiday on Wednesday, traders said.
Participants also pointed to rising demand from the air conditioning sector. Planned production for air conditioning is forecast at 18.19 million units in April, up 4% from March and up 8.1% from the same period a year ago, according to CITIC Futures.
SHFE aluminium eased 0.6% 18,625 yuan, zinc declined 1.1% to 22,520 yuan, lead shed 0.7% to 15,185 yuan, tin fell 1.2% to 205,130 yuan, while nickel was up 2.3% to 178,910 yuan a tonne.