Copper prices dipped slightly in Asia trade on Tuesday as investors pondered whether rising stocks would trigger a sell off from record highs and ahead of a widely expected US rate hike by the Federal Reserve, traders said.
Key three-month London Metal Exchange (LME) copper contracts were trading at $3,558/$3,563 per tonne against on Monday's close of $3,563 and just off low of $3,555.
On Friday copper hit an all-time record high of $3,600. LME stocks climbed 3,250 tonnes on Monday to 40,375, putting more distance between a 31-year low of 25,525 tonnes hit last month.
"Despite the stock increases, prices kept high yesterday, with people now looking to today's Fed meeting," a Tokyo-based trader said by phone.
The central bank is due to issue its post-meeting statement. The dollar's widening rate advantage has helped to boost the currency by 9 percent against the euro and the yen this year.
"If the dollar strengthens on the rate rise, it could cause funds to move out of metals, moving the LME towards the downside," the trader said. But tight supply and low stocks have continued to underpin the red metal. Industrial action both actual and threatened at copper mines in the United States and Mexico also continue to hang over the market.
Copper giant Group Mexico is confident it can avert strikes at its Mexican mines this month by inking a deal with the union, which has threatened to walk out at the company's giant Canine mine if a new agreement is not reached by August 27.
A five-week strike at Group Mexico's US unit Asarco has cut output by half from pre-strike estimates of around 180,000 tonnes, putting the future of the subsidiary in doubt but helping push world copper prices to new highs.
In other metals, aluminium was at $1,866/$1,870 versus $1,873. Nickel was at $14,350/$14,450 against $14,450 while zinc was at $1,285/$1,290. Tin was indicated at $7,000/$7,075 against $7,040 and lead was at $839/$844 from $839.
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