Strong dollar, growth fears push industrial metals lower
LONDON: Prices of copper and most other industrial metals fell on Thursday as worries over the global economic outlook increased and the US dollar hit its strongest in almost two years, making metals more expensive for buyers with other currencies.
Benchmark copper on the London Metal Exchange (LME) traded down 1.1 percent at $6,380 a tonne in official rings, the lowest since March 28.
The metal used in power and construction has been stuck around $6,500 since the end of February but is still up some 7 percent this year.
"There's still quite a bit of uncertainty (about economic growth)," said ING analyst Warren Patterson.
But he predicted that tight supplies and a likely US-China trade deal would help lift copper to around $6,900 at the end of the year.
LME STOCKS: Copper stocks in LME-registered warehouses rose by 8,675 tonnes to 194,800 tonnes, nearing 7-month highs touched earlier this month.
SPREAD: The discount for cash copper against the three-month contract on the LME, however, shrank to $2 from $28 on April 18, suggesting less metal is immediately available.
SHFE STOCKS: Copper stocks on the Shanghai Futures Exchange (ShFE), at 236,734 tonnes, have dipped in recent weeks but are still much higher than at the start of the year.
DEFICIT: Analysts expect another deficit in the refined copper market this year. There were shortfalls of 387,000 tonnes last year and 265,000 tonnes in 2017, according to the International Copper Study Group.
ANGLO: Anglo American's copper production rose in the first quarter by 4 percent to 161,100 tonnes.
JIANGXI: Jiangxi Copper Co plans to build a plant to produce refined copper in Malaysia.
DOLLAR: The US dollar hit its highest since May 2017 against a basket of major currencies, with the US economy seeming stronger than those of other countries.
GERMANY: Data showing German business morale deteriorated in April has underlined fears that growth around the world is slowing.
JAPAN/CENTRAL BANKS: Japan's central bank lowered growth projections for 2020 and joined many other central banks, including Indonesia's and Sweden's on Thursday, in delaying interest rate rises.
CHINA: China, the world's largest consumer of metals, has however seen an improvement in economic data in recent months, a positive sign for metals demand.
ZINC: LME zinc traded up 0.1 percent at $2,745.50 a tonne as the premium for cash metal over the three-month contract on the LME jumped to $117.50, the highest since December, signalling a shortage of nearby metal.
OTHER METALS: LME aluminium traded down 0.5 percent at $1,862 a tonne and lead traded 0.4 percent lower at $1,918. Nickel did not trade but was bid down 0.7 percent at $12,325, and tin was bid 0.8 percent lower at $19,535.