LONDON: Copper prices came under pressure on Tuesday as a lack of big-ticket stimulus from top metals consumer China disappointed, with the market looking ahead to data which could shed light on US monetary policy.
Three-month copper on the London Metal Exchange (LME) dropped 0.24% at $8,522 per metric ton in the official rings. China set a widely-expected 5% growth target for 2024 at a key parliament meeting on Tuesday that missed some investors’ expectations for stimulus measures.
“Nothing really stands out from China’s political meeting. Some selling pressure on copper and aluminium will remain for the first half of this month,” said Alastair Munro, senior base metals strategist at Marex.
The Chinese have not yet returned to the base metal market after the Lunar New Year holiday in February, but there are funds which are bullish on copper for the second half of 2024 and using the options market to take bets.
Copper prices have in recent months been driven by macro elements such as the dollar and its response to US economic data and what it means for when the Federal Reserve could cut key interest rates. A lower US currency makes dollar-priced metals cheaper for holders of other currencies, which could help boost demand.
Later this week, the market will see US employment data, specifically non-farm payrolls on Friday, used as a key gauge of economic health. Helping support copper prices are stocks in LME-registered warehouses, which at 114,075 tons have dropped 32% so far this year.
A source at a copper producer said shipping delays from Latin America and Africa are behind withdrawals from LME warehouses in Hamburg. LME copper stocks in Hamburg have dropped 60% to 11,800 tons since Jan. 23. More lead was delivered into LME warehouses in Singapore, sending total inventory to 187,750 tons, its highest in nearly seven years. LME aluminium eased 0.04% to $2,233 a ton, nickel lost 0.5% to $17,850, zinc edged up 0.23% at $2,455, lead declined 0.8% to $2,037 and tin dropped 0.5% to $26,650.
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