LONDON: Copper prices edged lower on Wednesday, undermined by a stronger dollar, but losses were modest due to firm demand and concerns about possible mine disruptions.
Benchmark three-month copper on the London Metal Exchange was down 0.1 percent at USD14,405.50 a metric ton by 0950 GMT. LME copper has gained 16 percent so far this year, largely due to large flows of metals to the US ahead of possible tariffs on refined copper, creating shortages elsewhere. “There’s downside pressure from the strong dollar. An October rate hike (in the US) is really off the table, but the fact that there are still rate hikes down the road is keeping metals under pressure,” said Nitesh Shah, commodity strategist at WisdomTree.
The dollar index edged higher, buoyed by rising oil prices, weighing on dollar-denominated industrial metals by making them more expensive for buyers using other currencies.
“Demand remains robust. Despite China’s real estate problems, it’s still progressing with electrification and that’s taking up a lot of copper,” Shah said.
Inventories in LME registered warehouses have shed 36 percent since early June while stocks in storage facilities linked to the Shanghai Futures Exchange have slumped by 79 percent in the same period. The SHFE was closed and will reopen when China returns from National Day holidays on Thursday.
Copper also got support after workers at Chile’s Centinela copper mine were set to strike after talks between two unions and Antofagasta Minerals broke down, adding to copper supply concerns. Aluminium lost 0.5 percent to USD3,118 a ton, as the dollar gains offset supply risks tied to the heightened Middle East tensions. Among other metals, zinc fell 0.4 percent to USD3,753 a ton while lead rose 0.4 percent to USD1,880, nickel added 0.5 percent to USD15,755 and tin edged up 0.2 percent to USD54,300.