Monday, November 29

London copper falls as dollar firms on quick rate-hike hopes


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Prices of copper, often used as a gauge of global economic health, fell in London on Friday as the dollar headed for its best week against major peers in almost five months on bets of an earlier-than-expected US interest rate hike.

A stronger dollar makes greenback-priced metals more expensive to holders of other currencies.

After a surprisingly strong reading on US inflation in October, investors anticipate the Federal Reserve to raise interest rates sooner than planned, which could trim liquidity in financial markets and slow recovery in the world’s biggest economy.

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Three-month copper on the London Metal Exchange was down 0.2% at $9,614 a tonne, as of 0701 GMT, while the most-traded December copper contract on the Shanghai Futures Exchange closed up 0.5% at 70,570 yuan ($11,038.29) a tonne.

Losses were cushioned by tight inventories in exchange warehouses . On a weekly basis, Shanghai copper rose 1.8% and the LME contract was also set to notch gains.

With rate-hike expectations happening alongside the passage of a trillion-dollar US infrastructure bill and tight copper scrap supply, investors should exercise a wait-and-see approach for copper, GF Futures said in a note.

FUNDAMENTALS

* Codelco’s Chinese customers are reluctant to sign up for copper supply in 2022 at the highest premium in seven years because of strong backwardation in the copper market, three sources with knowledge of the matter said.

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* On-warrant LME aluminum stocks fell to 595,825 tonnes, the lowest since December 2005, with most metals leaving Port Klang in Malaysia.

* The discount of LME cash aluminum over the three-month contract shrunk to $2.80 a tonne, the smallest level since Sept. 1, indicating tightening nearby supply.

* China’s power curbs cut 7% of the country’s annual aluminum production capacity, but only 1% of copper’s, said consultancy firm Wood Mackenzie.

* LME aluminum fell 0.6% to $2,645 a tonne, nickel dipped 0.1% to $19,735 a tonne and tin advanced 0.4% to $37,850 a tonne.

* ShFE aluminum increased 1.2% to 19,315 yuan a tonne, nickel was up 0.8% at 145,810 yuan a tonne and tin jumped 2.5% to 287,940 yuan a tonne.

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($1 = 6.3932 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Ramakrishnan M. and Sherry Jacob-Phillips)



financialpost.com

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