LONDON: Copper prices in London fell slightly on Thursday as concerns about central bank rate hikes and slowing global economic growth offset hopes of stimulus measures for the troubled property sector in top consumer China.
Three-month copper on the London Metal Exchange (LME) was down 0.1% at $8,284 a metric ton by 1054 GMT.
Market expectations of a major government stimulus package from Beijing have helped to lift prices for the metal used in the construction and power industries by 5% from their six-month low touched on May 24.
“The fundamentals remain fairly weak on the demand side so the longer an announcement on the stimulus package is delayed, the more likely base metals are to resume their downtrend,” said Arthur Parish, metals associate at SP Angel.
Supporting the dollar-priced base metals, the dollar index fell but remained close to a three-month high with the focus on the U.S. Federal Reserve’s June 13-14 meeting.
Copper extends gains on potential Chinese stimulus
Canada and Australia surprised investors by hiking interest rates this week. Markets are now pricing in a possibility that U.S. rates could stay higher for longer than initially thought, which could eventually hurt demand for metals.
“Sentiment towards copper remains mixed: the dollar strength and China growth concerns remain but the LME copper inventories have started to decline, accompanied by a surge in cancelled warrants,” said Standard Chartered analyst Sudakshina Unnikrishnan.
On-warrant copper stocks on the LME rose by 775 tonnes to 44,525 metric tons on Thursday, taking a pause after recent sharp declines which narrowed the discount for cash against the 3-month contract to a marginal $1 from $66 on May 23.
On the technical front, copper is hemmed in between 200-day and 21-day moving averages currently at $8,379 and $8,199, respectively.
Among other metals, LME aluminium rose 0.8% to $2,236.5 a metric ton while on-warrant LME stocks fell to a four-month low after fresh cancellations.
Zinc fell 0.8% to $2,378.5, lead dropped 1.0% to $2,024, nickel declined 0.3% to $21,345 and tin lost 0.3% to $25,565.