SINGAPORE, Aug 19: London copper eased on Monday as markets waited for more clues on when the US Federal Reserve may trim its commodity-friendly stimulus, after climbing for three of the past four weeks on evidence of resilient growth in China and a weaker dollar.
Copper prices have found support ahead of a seasonally stronger period for demand in top consumer China, but growth concerns are likely to resurface and curb potential gains, said analyst Tim Radford at Sydney-based adviser Rivkin.
‘The key thing that is really driving the copper market is a weaker dollar … If we see the USD weakness end then that will weigh on commodity markets – copper is probably due for a pull back,’ he added.
Three-month copper on the London Metal Exchange had slipped 0.47 percent to $7,365 a tonne by 0311 GMT, after climbing 1.2 percent the session before.
Copper prices have recovered by more than 11 percent from three-year lows plumbed in late June, but still remain down by around 7 percent for the year.
The most-traded December copper contract on the Shanghai Futures Exchange inched up 0.11 percent to 52,850 yuan ($8,600) a tonne.
Markets are waiting to see if minutes of the Fed’s last policy meeting will provide some clarity on when it might start scaling back stimulus – with far-reaching implications for borrowing costs across the globe. The minutes are due on Wednesday.
Glencore Xstrata is expected to write down the value of assets inherited from Xstrata by as much as $7 billion when it reports first-half earnings on Tuesday – the first full set of results since the takeover that created the mining giant in May. BHP Billiton will also report on Tuesday.
RUSAL, the world’s largest aluminium producer, said it would cut aluminium output by 357,000 tonnes, or around 8.5 percent of production, more than previously planned cuts of 7 percent.
Proposed rule changes for industrial metals warehouses and increased scrutiny by regulators could also unleash stored aluminium, adding to the global surplus and putting further downward pressure on prices.
The dollar held firm versus a basket of currencies on Monday and stayed above a recent seven-week low, getting support after U.S. 10-year Treasury yields set a two-year high on Friday. A weaker dollar makes assets priced in the greenback cheaper for holders of other currencies.
(agencies)
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