MELBOURNE: London copper moved away from 5-1/2-year lows on Wednesday, propped up by a weaker dollar after a drop in US capital goods orders sparked talk the Federal Reserve might push back its timeline for raising interest rates.
Copper prices have been walloped by persistent signs of weakening growth in top user China as well as sickly European demand and a surge in the dollar.
The Federal Reserve is widely expected to begin tightening monetary policy in mid-2015. It ends a two-day policy meeting on Wednesday. Analyst Dominic Schnider at UBS Wealth Management in Hong Kong said the Fed was unlikely to delay an interest rate rise, which meant metals faced the risk of a dollar revival in the near term.
"The lower oil price is a boost to consumers, so there is no reason for them to come on the dovish side. They will stick to their view. You should see renewed strength of the dollar, which should help copper test the $5,000 level in three months," he said.
Three-month copper on the London Metal Exchange lost some of its early gains and traded up 0.3 percent at $5,440 a tonne at 0236 GMT, after a 2.8 percent loss on Tuesday, when the price sank towards a 5-1/2-year low of $5,339.50 a tonne hit on Monday.
The most traded April copper contract on the Shanghai Futures Exchange sagged 1.7 percent to 39,520 yuan ($6,332) a tonne. Freeport-McMoRan Inc Chief Executive Officer Richard Adkerson said he expected mine delays, falling ore grades and spending cuts to support copper prices.
Polish copper producer KGHM, faced with a strike at its Chilean mine, Sierra Gorda, said it had contingency plans to maintain low-level production if the dispute was not resolved.
In other metals, LME zinc rallied 1 percent to $2,125 a tonne, partially clawing back losses from the session before, helped by a positive price differential for Chinese buyers.
Comments
Comments are closed.