LONDON: Copper prices slipped to 2-1/2-week lows on Monday as a stronger U.S. dollar triggered a sell-off despite signs of recovering growth in China’s manufacturing sector, a major consumer of industrial metals.
Benchmark copper on the London Metal Exchange (LME) was down 0.3% at $8,987 a metric ton at 1047 GMT having earlier touched $8,904 a ton, the lowest since Nov. 14.
A higher U.S. currency makes dollar-priced metals more expensive for holders of other currencies, which could weigh on demand, a relationship used by funds to trade using buy and sell signals from numerical models.
“The dollar is significantly higher. Chinese manufacturing PMIs were moderately bullish, but they have been overlooked,” said Dan Smith, head of research at Amalgamated Metal Trading (AMT). “It’s macro driven rather than China driven.”
China’s factory activity expanded at the fastest pace in five months in November as new orders, including those from abroad, led to a solid rise in production, a private-sector survey showed on Monday.
Copper ends steady on optimism
An official survey over the weekend also showed China’s manufacturing activity grew modestly for a second consecutive month in November, suggesting a blitz of stimulus is finally trickling through to the economy.
Overall, commodity and financial markets are worrying about U.S. President-elect Donald Trump’s plans to impose import tariffs, which would damage growth prospects around the world.
Elsewhere, the tin price was down 0.6% at $28,725 a ton. It has been pressured by expectations of rising shipments from Indonesia, a top exporter of the soldering metal.
“We haven’t got the trade data yet, but it looks like Indonesia’s tin export numbers for November will be up again,” AMT’s Smith said, adding that talk of tin mining restarting in Myanmar was also weighing on prices.
Over the last two months, tin has dropped 16%.
Aluminium was down 0.2% at $2,587 a ton, zinc fell 0.5% to $3,087, lead retreated 0.3% to $2,067 and nickel was down 0.5% at $15,825.
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