Copper prices down after strong US inflation data
Add BT as a preferred source
COPPER prices turned lower on Tuesday (Sep 13) after US inflation unexpectedly rose in August and pushed up the dollar as investors feared more hefty interest rate hikes that could curb economic growth and dampen metals demand.
Three-month copper on the London Metal Exchange (LME) had shed 1.4 per cent to US$7,847 a tonne by 1315 GMT after earlier touching its highest price since Aug 25.
Copper reversed after data showed the US consumer price index gained 0.1 per cent last month while economists polled by Reuters had forecast it would dip 0.1 per cent.
“That (CPI data) basically put the cat among the pigeons - there’s been a sharp drop in stock markets and the dollar is strengthening. We’re seeing some of this recent buying activity in metals being reversed,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Copper had been supported earlier by tightness on physical markets.
The premium for LME cash copper over the three-month contract surged to US$150 a tonne on Tuesday, its highest since November 2021, indicating shortages of immediately available copper in the exchange warehouse system.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
“The physical tightness has not gone away, but the market is responding to a signal that this may mean even higher rates for longer to combat inflation, which is not coming down at the pace the market was hoping for,” Hansen said.
The dollar index reversed after the US data and was up 1 per cent.
A stronger dollar weighs on commodities priced in the US currency by making them more expensive for buyers holding other currencies.
Aluminium prices pared gains, but remained in positive territory after news that China’s southwestern province of Yunnan has ordered producers of electrolytic aluminium to reduce power usage this week.
LME aluminium added 0.6 per cent to US$2,297 a tonne while zinc, another energy-intensive metal to have production curbed, rose 0.7 per cent to US$3,220.
LME tin dropped 1.2 per cent to US$21,200 a tonne, lead eased 1.4 per cent to US$1,921.50 and nickel fell 1.8 per cent to US$24,140. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
