Dollar Strength Spurs Dip in London Copper Prices; Other Metals Mixed

Copper Contracts

Copper prices in London declined on Tuesday, primarily due to the strengthening of the U.S. dollar, which effectively raised the cost of dollar-denominated metals for those holding other currencies.

Date: Aug 01, 2023

Place: New Delhi, India

The three-month copper contract on the London Metal Exchange (LME) registered a slight drop of 0.5%, bringing the price down to $8,788 per metric ton as of 0805 GMT. Alongside copper, the price of aluminum also declined by 0.5%, standing at $2,270.50. Conversely, prices for other metals increased, with zinc up by 0.3% at $2,573, lead advancing 0.2% to $2,153.50, and nickel seeing a 0.7% rise to $22,440.

The surge in the dollar’s value came after a recent Federal Reserve survey revealed that U.S. banks tightened their credit standards and experienced weaker loan demand during the second quarter. These findings indicate that rising interest rates are beginning to affect the economy.

Jinrui Futures, in a note, commented that copper consumption is typically restrained during the off-peak season. It also highlighted the current limited supply of copper and suggested that short-term prices might continue to rise due to anticipated news of economic stimulus from China.

However, China’s recent policies aimed at bolstering its economy have so far lacked concrete measures. Over the weekend, Beijing and Shenzhen announced plans to implement strategies to better address the needs of homebuyers but did not provide specific details.

The most actively traded copper contract for September on the Shanghai Futures Exchange (SHFE) rose 1.6% to 70,600 yuan ($9,852.77) per metric ton. Aluminum and zinc also climbed 1.1% to 18,570 yuan and 1.8% to 21,175 yuan, respectively. Meanwhile, lead fell 0.5% to 15,895 yuan per metric ton, and nickel dropped 0.5% to 171,270 yuan.

Tin prices decreased as inventories in LME warehouses soared to 5,275 metric tons, the highest level since October 2020. Similarly, SHFE tin stockpiles have been close to their highest since 2017. This surplus supply decreased tin prices, with LME tin falling as much as 3.6% to $27,595 per metric ton, its lowest since July 6. SHFE tin also fell by 4.2% to 224,180 yuan per metric ton, marking its lowest point since July 5.


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