Copper under pressure from climbing dollar – ET Auto

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<p>Copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) have dropped nearly 90% to 30,905 tons since late February.<br /></p>
Copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) have dropped nearly 90% to 30,905 tons since late February.

Copper prices steadied on Tuesday as improving factory activity data from top consumer China and low Shanghai inventories countered selling pressure fuelled by a higher dollar.

Benchmark copper on the London Metal Exchange (LME) was little changed at USD 8,565 per metric ton at 1704 GMT. Prices of the metal used in the power and construction industries rose to five-month highs of USD 8,716 last week.

Traders said funds sold copper and other industrial metals after the dollar started to strengthen during European trade.

A stronger U.S. currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand and prices.

Surveys of purchasing managers (PMI) in China showed manufacturing activity expanded at a quicker pace in December thanks to stronger gains in output and new orders while new export orders fell at a slower pace.

“Positives are China PMIs beating expectations and inventories in Shanghai, but the dollar has started the year on a much stronger footing,” one metals trader said.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) have dropped nearly 90% to 30,905 tons since late February.

In Shanghai’s bonded warehouses, copper stocks have fallen 96% to 6,500 tons since the middle of March.

However, doubts about demand prospects can be seen in the discount for cash copper over the three-month contract trading near 31-year lows.

Elsewhere, aluminium was supported by worries about supplies of feedstock alumina after a blast last month damaged fuel stocks at the main terminal in Guinea, the world’s third-largest producer of alumina raw material bauxite.

However, aluminium stocks in LME-approved warehouses have risen 28% to 566,375 tons since Dec. 6, undermining sentiment on prices of the metal used in the power, construction and packaging industries .

Aluminium was down 1.9% at USD 2,338 a ton.

In other metals, zinc ceded 1.3% to USD 2,622, lead retreated 0.2% to USD 2,063, tin was down 0.3% at USD 25,330 and nickel gained 0.1% to USD 16,615.

  • Published On Jan 3, 2024 at 01:56 PM IST

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