LONDON: Copper prices came under pressure on Monday as the dollar strengthened and worries about Chinese demand resurfaced after the country’s central bank surprised markets by leaving key interest rates unchanged.
Elsewhere, zinc prices on the London Metal Exchange (LME) jumped to $2,615 a metric ton, the highest since Jan. 3 after Nyrstar said it will suspend zinc smelting operations at its Dutch plant in Budel in the second half of January.
Benchmark copper was little changed at $8,340 a ton at 1141 GMT from an earlier low of $8,308.
“The dollar is a major factor for base (metals). The market was disappointed by lack of action from China’s central bank,” one copper trader said, adding that he expected subdued activity because of a U.S. holiday.
China’s central bank left the medium-term policy rate unchanged on Monday, defying market expectations for a cut as a weaker currency limited the scope of near-term monetary easing to boost the economy.
Copper dips on stronger dollar
A stronger U.S. currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand.
Base metals markets are awaiting Chinese data on investment, industrial output, GDP and house prices on Wednesday for clues on future demand prospects in the world’s biggest metals consumer.
On the technical front, copper is hemmed in by strong support at the 100-day moving average of $8,290 a ton and resistance at $8,390, where the 50-day and 200-day moving averages are converging.
Traders said Nyrstar’s supension of zinc production in Europe because of high energy costs and difficult market conditions could tighten the European market if prolonged.
Budel’s capacity is 315,000 metric tons of zinc a year and global supplies of the metal used to galvanise steel are estimated at about 14 million tons this year.
Zinc was up 2.2% at $2,570 a ton.
In other metals, aluminium slid 0.6% to $2,206, lead gained 0.2% to $2,094, tin was up 0.3% at $24,705 and nickel retreated 0.4% to $16,275.
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