LONDON: Copper prices dipped on Tuesday, pressured by a buoyant dollar, but losses were curbed by fresh hopes for more stimulus in top metals consumer China.
Three-month copper on the London Metal Exchange (LME) was down 0.1% at $8,372 a metric ton in official open-outcry trading after rising by 0.5% in the previous session.
“The market has been somewhat rattled by that comment from the ECB member yesterday highlighting the risk that inflation will prevent the bank from cutting rates to the extent that the market is pricing in,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Those comments helped the dollar index climb to a one-month high as investors tempered rate cut expectations. A strong dollar makes commodities priced in the US currency more expensive for buyers using other currencies.
“Against these headwinds, copper seems to be doing reasonably well. I believe it’s the stimulus speculation in China that’s adding a bit to the market,” Hansen added.
He referred to a media report that China was considering more stimulus in the form of $139 billion of new debt issuance.
LME copper has shed 4% since touching its highest in nearly five months on Dec. 28 and Hansen said the market would need to close above $8,400 to attract new buying momentum.
On the Shanghai Futures Exchange, the most traded March copper contract closed nearly flat at 67,810 yuan ($9,440.21) a ton. “Investors need to acknowledge that 2024 could be the first year since 2020 to witness a synchronized slowdown in most major economies. Bearish bets would rise on metals from funds who want to play the macro slowdown story,” said Sandeep Daga, a director at Metal Intelligence Centre.
LME aluminium and tin were little changed in official activity at $2,205 and $24,775 a ton respectively while nickel fell 0.5% to $16,135, lead dipped 0.1% to $2,107 and zinc shed 0.7% to $2,540.
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