LME Commentary

 

Three-month copper futures on the LME benchmark were down 0.8% at $9,218 a tonne at 1615 GMT on Tuesday.

 

Copper, widely used in the power and construction industries, reached an all-time high of $10,845 in early March. It then traded lower under pressure from Fed rate hikes and weak demand in China, hitting a seven-month low of $8,938 on May 12. Copper fell 18% in about two months through the end of May, largely as the Federal Reserve's aggressive interest rate hikes raised the risk of a recession, while a pause in economic activity in some of China's biggest cities also raised concerns about the outlook for metals demand. Copper is often seen as a barometer of economic activity. Copper prices are still around 15% below their historical peaks.

 

The U.S. dollar rose to a two-decade high against a basket of currencies on Tuesday, meaning U.S. dollar-quoted copper is more expensive for buyers using other currencies, weighing on demand and prices.

 

Falling stocks and a stronger dollar reflected a general lack of risk appetite among investors, and the prospect of a recession also cast a shadow on demand for metals, analysts said.

 

With U.S. inflation data at a four-year high in May, the door was opened for Federal Reserve officials to decide on Wednesday to raise interest rates by 75 basis points.

 

The Shanghai ocean mountain copper premium rebounded slightly to $57.50 a tonne on Tuesday, up from $49 last week but still well below its recent peak of $78 a month ago.

 

Three-month aluminium on the LME fell 2.2% to $2,570 on Tuesday, hitting its weakest intraday price since Nov. 10. LME aluminium had fallen 1.9% on Monday.

 

Other metals at the close included LME zinc down 0.4% to $3,598.50 a tonne, lead slipped 0.6% to $2,086 a tonne and nickel down 2.6% to $25,250 a tonne, also a three-month low ; tin fell 5.5 percent to $31,100 a tonne, its lowest in nearly a year. (over)