Copper slips as inventories build; weak dollar offers support
LONDON: Copper prices slipped on Thursday as more inventories arrived in warehouses, but losses were modest due to a weaker dollar after the U.S. government moved to calm the bond markets. Benchmark three-month copper on the London Metal Exchange was down 0.4% at $13,988 a metric ton by 1025 GMT, having added 0.5% in the previous session. LME copper hit a six-month peak on Monday on worries about…
On Thursday, copper prices declined as warehouses received additional supplies, though the decline was relatively minor due to a weaker dollar following a U.S. government effort to stabilize bond markets. The benchmark three-month copper price on the London Metal Exchange fell by 0.4% to $13,988 per metric ton by 10:25 GMT, after gaining 0.5% the previous day.
LME copper had reached a six-month high on Monday due to concerns about diminishing inventories, but has since eased as fresh metal replenished storage areas. Saxo Bank's head of commodity strategy, Ole Hansen, stated that yesterday's Treasury buyback announcement helped prevent the price drop as inventories began returning to the LME.
The announcement conveyed a strong signal of the potential for a weaker dollar ahead and highlighted a global environment where investors are competing not only for debt funding but also for tangible assets, with copper being a prominent example. The dollar index dipped to a three-month low after the Treasury Department attempted to ease a bond market sell-off that had driven long-end yields to their highest level since 2007.
A weaker dollar makes commodities priced in U.S. currency more affordable for buyers using other currencies. The most-traded copper contract on the Shanghai Futures Exchange increased by 0.2% to 107,200 yuan ($15,943.13) per ton. LME copper inventories expanded by another 3,950 tons, according to data released on Thursday, resulting in a 17% increase over the past week.
On-warrant copper stocks, or metal not yet scheduled for removal from warehouses, on the LME surged more than 50% since the beginning of the week, yet remain less than half of their levels three months prior. Other metals saw declines or gains: LME aluminum dropped 1% to $3,196 per ton, nickel fell 1.3% to $16,890, while zinc rose 1.2% to $3,751. Lead increased by 0.1% to $1,890, and tin climbed 0.3% to $55,705.
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