Onome Amuge
Copper eased on Tuesday as a stronger dollar and a pullback in risk sentiment prompted investors to take profits following the metal’s rise to an all-time high a day earlier.
Three-month copper on the London Metal Exchange slipped 0.4 per cent to $11,202 a tonne by mid-morning in London, retreating from Monday’s record of $11,334. The benchmark contract has climbed 27 per cent this year amid mounting concerns over tightening supplies.
“We’re pausing a bit today after we saw the dollar recover somewhat and lower risk appetite in general,” said Ole Hansen, head of commodity strategy at Saxo Bank. Global equities made only modest gains while traders grew more cautious, unsettled by a slide in cryptocurrencies and a broad sell-off in government bonds. The dollar strengthened against the yen after a well-received auction of Japanese debt, adding further pressure to dollar-denominated commodities.
“Copper remains in a buoyant mood, but we’re in need of a correction, and as long as we hold $11,000 we’re poised for higher prices as the outlook for next year points to a tight market,” Hansen added.
Market participants also pointed to increased flows of metal into the US, where traders have been exploiting arbitrage opportunities between CME Group’s Comex futures and the LME by delivering material into American warehouses. At the same time, investors are assessing the impact of a plan by major Chinese smelters to cut output by 10 per cent next year — a move analysts at Jinrui Futures said would reinforce expectations of tighter refined copper supply.
In Shanghai, the most-traded copper contract inched 0.1 per cent higher to close the day session at Rmb88,920 ($12,575) a tonne, after touching a record Rmb89,920 earlier in the session.
Across other base metals, LME aluminium rose 0.1 per cent to $2,896.50 a tonne, lead added 0.1 per cent to $2,003, while zinc slipped 0.4 per cent to $3,085. Nickel fell 0.2 per cent to $14,900 and tin declined 0.4 per cent to $39,000.
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