Copper prices fell on Thursday, pressured by a strong dollar, fears of a sooner-than-expected interest rate hike in the U.S. and a forecast for rising supply in the coming months.
A firm dollar, which has been hovering around an 11-week high, makes greenback-priced metals more expensive to holders of other currencies, while a rate hike could dampen liquidity into metals and slow a global economic recovery.
Three-month copper on the London Metal Exchange fell 1.5% to $9,339 a tonne by 0551 GMT, while the most-traded July copper contract on the Shanghai Futures Exchange edged up 0.2% to 68,260 yuan ($10,544.85) a tonne, tracking overnight gains in London.
A period of high inflation in the United States may last longer than anticipated, two U.S. Federal Reserve officials said on Wednesday, prompting one to pull forward his views on when the central bank should start raising interest rates.
“The U.S. dollar is heading higher and there will be more copper concentrate coming in the second half of this year. Copper inventories are building as well,” said a Singapore-based trader.
“The bounce from $9,200 to above $9,300 (on Wednesday) is to digest the fact that the (Chinese) inventory release is smaller than expected,” the trader said, referring to China’s state reserve plan to auction 100,000 tonnes of base metals in July.
* BHP Group plans to almost double exploration spending for base metals within five years, its Chief Technical Officer Laura Tyler said, after shifting its exploration headquarters to Canada.
* LME aluminium fell 1.1% to $2,412.50 a tonne, nickel dipped 0.6% to $17,965 a tonne while ShFE nickel rose 0.8% to 134,060 yuan a tonne and ShFE tin increased 1.2% to 207,600 yuan a tonne.
* A nickel trader said strong demand, tight supplies and a large amount of short positions in July have forced some traders to cover their positions, leading to a steady rise in nickel price.
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($1 = 6.4733 yuan)
(Reporting by Mai Nguyen; Editing by Amy Caren Daniel)