Copper retreats on firm dollar, profit-taking

LONDON: Copper prices pulled back on Friday on a stronger dollar and as investors locked in profits from a recent rally ahead of the weekend.

Three-month copper on the London Metal Exchange (LME) dropped 0.9% to $8,870 per metric ton by 1120 GMT.

It had rallied about 13% from early February until touching an 11-month peak of $9,025.50 on Monday.

“It’s been a very strong month and pull-backs are inevitable especially on days when the dollar is stronger,” said Nitesh Shah, commodity strategist at WisdomTree.

The dollar index gained after a week of central bank announcements, making commodities priced in the U.S. currency more expensive for buyers using other currencies.

On the Shanghai Futures Exchange (SHFE), the most-traded May copper contract closed down 0.8% to 72,290 yuan ($10,002.77) a ton.

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Shah said that after short-term weakness and consolidation, copper was likely to see further gains, especially once central banks actually started cutting interest rates.

“I think the fundamentals remain firm, especially after the smelter cutbacks in China start to have an impact on metal availability.”

The latest jump in prices was fuelled by news last week that major Chinese copper smelters reached agreement to lower operation rates at some loss-making plants.

“I expect prices to rise back above $9,000 and probably hit the $10,000 threshold in a few months as well,” Shah said.

Among other metals, LME aluminium shed 0.3% to $2,295.50 a ton, nickel dropped 0.8% to $17,405, zinc eased 1.1% to $2,497, tin lost 1% to $27,595, and lead slipped 0.7% to $2,037.

On a weekly basis, nickel and tin are the worst performers across base metals on the LME as supply disruption eased in major producer Indonesia where minerals exports and production resumed as more quotas were approved after months of delays.

LME nickel fell 4% so far this week, the most since Nov. 24, and LME tin has lost 4.4% week-on-week, set for the steepest weekly decline since Sept. 29 last year.