LONDON: Copper prices dipped below the key mark of $10,000 a metric ton on Tuesday for the first time in three weeks as consolidation continued due to lacklustre demand in top consumer China.
Three-month copper on the London Metal Exchange fell 1.6% to $9,979.5 a ton as at 1056 GMT. It earlier dipped to $9,964.5, the lowest since May 13.
“The United States’ manufacturing data is weaker than expected. And copper inventory in Shanghai, closely watched as a gauge of physical demand, remained high,” said Carsten Menke with Julius Baer.
“Consolidation in copper could continue until we see clear evidence of a global manufacturing recovery,” Menke added.
Soft U.S. economic data has boosted the case for earlier rate cuts by the Federal Reserve, helping the dollar to rebound from its lowest since mid-March.
A stronger dollar makes greenback-priced metals costlier for holders of other currencies.
Copper climbs on Chinese data and hopes of Fed rate cuts
Prices of copper, widely used in cables and infrastructure for its conductivity, has rallied to all-time highs across exchanges in London, Chicago and Shanghai in the last two months.
Copper’s rally has muted physical demand. LME copper inventories climbed to a six-week high of 118,950 tonnes with delivery to registered warehouses in Taiwan.
Shaanghai’s inventory also remained at close to 300,000 tonnes since March.
Chinese copper inventories have not yet started their seasonal decline, suggesting that the copper market is much more sufficiently supplied than some traders had thought.
Looking ahead, China’s industrial data due in mid-June will shed more light on metals demand later this year, Menke said.
For other metals, LME zinc touched a three-week low of $2,909. The galvanising metal last traded 0.5% lower at $2,927.
LME aluminium dropped 0.7% to $2,642.5 a ton, nickel edged down 1.1% to $19,200, tin was down 1.1% at $31,980 while lead was 0.9% lower at $2,267.5.
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