LONDON: Copper prices eased on Wednesday as the higher dollar triggered profit taking on long positions, but losses were limited by expectations of strong demand in top consumer China and hopes for coronavirus vaccines. Benchmark copper on the London Metal Exchange was down 0.3% at $7,623 a tonne at 1657 GMT.
Prices of the metal, used widely in the power and construction industries, hit $7,743 on Tuesday, the highest since March 2013 and a gain of nearly 25% this year. "Funds are taking profits, the vaccine news seems to be priced in and the dollar's downtrend seems to have stalled," a copper trader said. "But China is looking good growth-wise and demand is unlikely to disappoint." A rising US currency makes dollar-denominated metals more expensive for holders of other currencies, which could subdue demand and prices.
Activity in China's factory sector accelerated at the fastest pace in a decade in November. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 54.9 from October's 53.6.
Strong demand in China can be seen in its imports, which rose year on year in October and set a new annual peak with two months to spare.
"Strength in China's copper imports has destocked Western copper markets," analysts at Goldman Sachs said in a note.
"China's onshore market has tightened faster than our earlier expectations, driven by exceptional end-demand trends in the second half and greater government stockpiling." Latest news on vaccines comes from Britain, which approved Pfizer's Covid-19 vaccine on Wednesday, jumping ahead of the United States and Europe to become the West's first country to formally endorse one. Also supporting industrial metals was the prospect of agreement on stimulus in the United States.
US lawmakers have put forward a flurry of stimulus proposals in an attempt to pass something this month. Aluminium prices slipped 0.3% to $2,058 a tonne, zinc lost 0.5% to $2,756, lead fell 1.9% to $2,047, tin was down 0.5% at $18,805 and nickel lost 1.6% to $16,010.
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