MELBOURNE, Mar 25: London copper slipped on Wednesday from more than two-month highs hit the previous session as the dollar firmed, but expectations of falling mine supply supported prices.
The dollar clung to modest gains early in the session, partly after U.S. consumer prices rebounded in February keeping the Federal Reserve on course to raise interest rates this year. A stronger dollar erodes the purchasing power of buyers paying with other currencies.
Copper demand from top consumer China is picking up only slowly after Lunar New Year.
‘We see 0.5 percent demand-growth for copper this year, the lowest since 2006 … it’s not looking like there will be robust demand-growth from consumers,’ said analyst Matthew Fusarelli at AME Group in Sydney.
He added that AME sees a 410,000-tonne surplus this year, but said that could dwindle on supply threats. ‘I think copper this year will do better than many expect.’ Three-month copper on the London Metal Exchange had slipped 0.7 percent to $6,105 a tonne by 0304 GMT. It ended the previous session little changed after stretching to $6,203.50 a tonne – its highest since Jan. 05.
LME copper surged more than 10 percent trough-to-peak over the week to Tuesday and prices are entering a higher band of consolidation, underpinned by the 100-day moving average at 6,120.
The most-traded June copper contract on the Shanghai Futures Exchange also sagged 0.7 percent to 43,590 yuan ($7,020) a tonne. Reflecting subdued demand, front-month Shanghai futures prices were trading almost level with benchmark prices, down from more than 500 yuan higher in late February. Euro zone businesses ramped up activity in March as the European Central Bank started printing money to spur economic growth, while a slowdown among Chinese factories fuelled expectations of more monetary stimulus. With no end in sight to a drought that has blighted Chile for the last several years, the government will invest in desalinization plants and reservoirs, the country’s president said.
The drought is hampering copper output in the world’s top exporter and driving energy prices higher. Elsewhere, Malaysia plans to reach a solution with London Metal Exchange (LME) over a new goods and services tax on metals traded or stored in the country’s bonded zones before an April 1 deadline, the deputy finance minister said on Tuesday. (AGENCIES)
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