Pandemic, firm dollar set LME copper for first monthly fall in 1 year
- A stronger dollar makes greenback-priced metals more expensive and less appealing to holders of other currencies.
HANOI: London copper prices on Wednesday were set for their first monthly decline in a year as a firm US dollar and a global surge in coronavirus infections stoked caution among traders.
Three-month copper on the London Metal Exchange edged up 0.1% to $8,783 a tonne by 0538 GMT, but lost 3.2% this month, and was on track for the first monthly fall since March 2020.
The contract, however, is still set for its fourth straight quarterly gain, as tight mine supply, demand hopes and strong liquidity in the financial markets pushed prices to $9,617 a tonne in February, only 6% shy of the record $10,190 level.
The most-traded May copper contract on the Shanghai Futures Exchange fell 0.9% to 65,730 yuan ($10,016.15) a tonne, also on track for a monthly drop.
"The market ran a bit ahead of itself in February," commodities broker Anna Stablum of Marex Spectron said, adding that rising COVID-19 cases in Europe, a firm dollar and falling Chinese equities amid monetary tightening weighed on prices.
A stronger dollar makes greenback-priced metals more expensive and less appealing to holders of other currencies.
"The Chinese markets have been extremely quiet this month and I believe we need to see a pick up in physical premiums to get them going again," Stablum added.
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