Key Takeaways
- Copper prices fell slightly due to a stronger dollar.
- Demand remains strong, supported by China's ongoing electrification projects.
- Supply worries, including potential mine disruptions, provided some support.
Copper prices edged lower on Wednesday, with the benchmark three-month copper on the London Metal Exchange down 0.1% to $14,405.50 a metric ton by 0950 GMT.
The decline was attributed to the strengthening of the US dollar, which made copper more expensive for buyers using other currencies.
Despite the slight dip, copper prices have gained 16% this year, largely due to large metal flows to the US ahead of possible tariffs on refined copper, creating shortages elsewhere.
Nitesh Shah, a commodity strategist at WisdomTree, noted, 'There’s downside pressure from the strong dollar. An October rate hike (in the US) is really off the table, but the fact that there are still rate hikes down the road is keeping metals under pressure.'
The dollar index edged higher, buoyed by rising oil prices, which weighed on dollar-denominated industrial metals.
Demand for copper remains robust, with China still progressing with electrification projects, despite real estate problems.
Inventories in LME registered warehouses have decreased by 36% since early June, while stocks in storage facilities linked to the Shanghai Futures Exchange have slumped by 79% in the same period.
Supply concerns, including potential mine disruptions, provided some support to copper prices, particularly after workers at Chile’s Centinela copper mine were set to strike.
Other metals also experienced fluctuations, with aluminium losing 0.5% to $3,118 a ton, zinc falling 0.4% to $3,753 a ton, lead rising 0.4% to $1,880, nickel adding 0.5% to $15,755, and tin edging up 0.2% to $54,300.
There’s downside pressure from the strong dollar. An October rate hike (in the US) is really off the table, but the fact that there are still rate hikes down the road is keeping metals under pressure.
Nitesh Shah, Commodity strategist at WisdomTree
