LONDON: Copper prices fell on Tuesday, hitting their lowest levels in more than three weeks, as inventories at the London Metal Exchange climbed and growth concerns were reinforced by rising oil prices. Benchmark copper on the LME was up 0.7percent at USD14,094 a metric ton at 1406 GMT from USD13,926 earlier in the session, the lowest since August 20.
Traders said short covering and a perception that copper was cheap helped the metal recover. Copper stocks in LME registered warehouses have risen nearly 20percent since the middle of August to 242,900 tons, due to elevated premiums for nearby contracts against longer-dated forwards.
Traders expect more copper sold at previously high prices to be delivered to LME warehouses over coming days. But with the premiums flipping into discounts last week deliveries are likely to dry up pretty quickly, they added.
Copper prices across maturities started to fall last week after sources told Reuters US President Donald Trump had not yet made a decision on whether to impose tariffs on copper imports.
The possibility of tariffs on US copper imports pushed Comex copper prices above LME prices. Traders have, for the past 18 months, shipped copper to the United States, taking Comex stocks to record highs.
“Nothing good can come of confusing markets with what is essentially government policy,” said Panmure Liberum analyst Tom Price. “My gut feeling is he will impose it at some point otherwise we’re going to see the biggest trade reversal in the history of copper.”
Resistance on the upside is at the 21-day moving average, currently around USD14,270 and support is around USD13,755, the 100-day moving average. Analysts say concerns about oil supplies due to escalating tensions in the Middle East and prices at around USD107 a barrel, up from near USD87 a barrel at the end of August, will weigh on growth, manufacturing activity and demand for metals.
Aluminium rose 0.2percent to USD3,250, zinc firmed 0.1percent to USD3,798, lead ceded 0.2percent to USD1,879, tin rose 0.5percent to USD52,120 and nickel retreated 1percent to USD16,175.