Copper retreats on firm dollar, profit-taking ahead of US data

LONDON: Copper prices pulled back on Thursday on a firm dollar and as investors locked in profits from a rally to a five-month peak ahead of key US jobs data and amid uncertainty about tariffs.

Three-month copper on the London Metal Exchange slipped 0.7 percent to USD9,906 per metric ton by 1415 GMT, a day after hitting its strongest since March 26 at USD10,038.

LME copper has gained 13percent so far this year. “It seems to be simply profit-taking ahead of these economic data prints,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

“Also, this USD10,000 level seems to be quite a firm barrier for the copper price for now and the underlying fundamentals are not yet strong enough for it to be able to punch through.” The crucial non-farm jobs report on Friday that will help set expectations for the central bank’s next few policy meetings. The most-traded copper contract on the Shanghai Futures Exchange shed 0.5percent to 79,770 yuan (USD11,152.12) a ton.

Also weighing on metals markets was a steady dollar index, making commodities priced in the US currency more expensive for buyers using other currencies. US Comex copper futures dropped 1.2 percent to USD4.52 a lb, bringing the premium of Comex over LME copper to USD61 a ton. Uncertainty about demand in top metals consumer China was also unsettling markets.

Marginal weakness in terminal demand may reflect a lacklustre peak season in China, though the widespread shutdown of scrap copper rod mills helped lend strength to copper prices, said broker Galaxy Futures. LME zinc shed 0.6 percent to USD2,843.50 a ton, as investors have largely shrugged off low inventories of the metal mainly used in galvanizing steel.

LME zinc stocks have slid 76 percent so far this year. “For us, the most important zinc demand/price driver in play is abating global steel industry activity, particularly in China,” Tom Price, head of commodities strategy at Panmure Liberum, said in a note.

Among other metals, aluminium lost 0.8percent to USD2,597 a ton, lead dipped 0.1percent to USD1,994.50, nickel dropped 0.6percent to USD15,210 and tin eased 0.3percent to USD34,575.