Copper prices in London dropped due to a stronger dollar, despite reports of China’s intentions to expand its strategic metal reserves. The dollar’s strength was influenced by the Federal Reserve’s interest rate policies, making dollar-priced metals more costly for foreign buyers. Efforts in the U.S. to boost domestic production of critical minerals further complicate market dynamics.
Copper prices experienced a decline on Friday, driven primarily by a stronger U.S. dollar, which countered the optimistic outlook stemming from reports of China expanding its strategic reserves of essential industrial metals. According to Bloomberg News, the National Food and Strategic Reserves Administration is looking into price inquiries and bidding for various metals, including cobalt and lithium; however, details regarding volume or timing were not provided.
As of 0707 GMT, benchmark three-month copper on the London Metals Exchange (LME) fell by 0.9%, settling at $9,853 per metric ton. A trader commented that the news regarding strategic purchasing lacked significant impact on metal prices due to the absence of specific details.
The dollar’s strength is bolstered by the U.S. Federal Reserve’s stance on maintaining interest rates, leading to a 0.3% increase in the dollar index, reaching 104.06 after a previous 0.36% rise. A stronger dollar heightens the cost of dollar-priced metals for international buyers.
In a related development, U.S. President Donald Trump invoked emergency powers to enhance domestic production of vital minerals, such as lithium and nickel. This initiative aims to diminish China’s influence in the sector and satisfy the burgeoning demand anticipated for electric vehicle batteries.
In terms of other metals, LME aluminium dropped by 0.7% to $2,641.5 per ton, while lead experienced a decrease of 0.8% to $2,040, zinc slipped by 0.4% to $2,907, and tin fell by 2.1% to $34,610. Nickel also lost 0.8%, settling at $16,150. On the Shanghai Futures Exchange (SHFE), copper saw a loss of 0.9% to 80,610 yuan ($11,252.64) per ton, while aluminium fell 0.7% to 20,700 yuan, and lead dropped 1.4% to 17,430 yuan. The prices for zinc remained unchanged at 23,770 yuan, nickel fell by 0.9% to 129,190 yuan, and tin slid 1.0% to 276,150 yuan.
In summary, copper prices have dipped due to the influence of a stronger dollar, which has overshadowed the positive expectations related to China’s potential stockpiling of key industrial metals. The market’s sentiment was further dampened by a lack of concrete details regarding China’s purchasing plans. Additionally, efforts by the U.S. government to strengthen domestic production of critical minerals signal ongoing concern over reliance on foreign suppliers, particularly from China. Overall, these dynamics continue to shape the landscape of metal prices in the market.
Original Source: www.tradingview.com
