keywords :
Copper prices slipped on Tuesday as doubts over demand in top consumer China were reinforced by a stronger dollar, though there was some support from a hefty drop in inventories at warehouses approved by the London Metal Exchange (LME).
Benchmark copper on the LME CMCU3 was down 1.2% at $9,630 a tonne by 1018 GMT, having of touched a five-week high of $9,916.19 in the previous session on optimism that the lifting of COVID-19 lockdowns in China would boost demand.
“Although there is going to be some upside cheer in a host of commodity markets, the jury is out as to how the Chinese authorities are going to handle COVID going forward,” said Edward Meir, analyst at ED&F Man Capital Markets.
“As long as Chinese authorities continue to pursue zero-COVID policies, China’s recovery will be a stop–go type of affair with uncertain implications for both growth and metals demand.”
DATA: Trade data from China this week should yield clues to economic activity in the country.
DOLLAR: A stronger U.S. currency is weighing on industrial metals, making dollar-priced commodities more expensive for holders of other currencies.
INVENTORIES: Copper stocks in LME warehouses fell 20,200 tonnes to 120,775 tonnes, the lowest since April 14. Cancelled warrants – metal earmarked for delivery – are at 24%, indicating that more metal is due to leave the LME system.
ALUMINIUM: Stocks of aluminium in LME warehouses have fallen to 21-year lows of 441,725 tonnes. Cancelled warrants stand at 57%.
“LME warehouses will run out of (aluminium) by October,” said Bank of America analyst Michael Widmer.
“China’s (aluminium) producers are restarting smelters that had been idled last year and demand is also weak. But then again, European smelters are shutting down and economic activity in China may accelerate as lockdowns ease.”
Aluminium was down 1.2% to $2,749 a tonne.
OTHER METALS: Zinc fell 2.5% to $3,776 a tonne, lead slipped 1.3% to $2,186, tin ceded 0.2% to $35,550 and nickel lost 3% to $28,810.
Source: Reuters