Copper Prices Decline Amid Strong Dollar and China’s Stockpiling Plans

Copper prices fell due to a stronger dollar, despite positive reports on China’s stockpiling plans. The National Food and Strategic Reserves Administration of China is investigating bids for industrial metals, though specifics remain vague. The dollar’s strength is linked to the U.S. Federal Reserve’s stance on interest rates, affecting metal pricing globally.

Copper prices experienced a decline in London on Friday, primarily due to a stronger dollar which overshadowed positive reports regarding China’s plans to increase its strategic reserves of essential industrial metals. The National Food and Strategic Reserves Administration of China was reported to be making inquiries and engaging in bidding for metals such as cobalt, copper, nickel, and lithium, although specifics regarding volume or timing were not disclosed.

Benchmark three-month copper prices on the London Metals Exchange (LME) dropped by 0.9%, settling at $9,853 per metric ton as of 0707 GMT. A trader commented that the news concerning strategic buying had minimal influence on metal prices, largely due to the absence of detailed information. The dollar’s resilience was further supported by the U.S. Federal Reserve’s announcement indicating no immediate plans for a reduction in interest rates.

The dollar index climbed 0.3% to 104.06, following a 0.36% increase on Thursday, which renders dollar-priced metals more costly for purchasers using alternative currencies. In related developments, U.S. President Donald Trump invoked emergency powers to enhance domestic production of critical minerals, including lithium and nickel, as a countermeasure to China’s dominance in the market and to meet the growing demand in electric vehicle battery production.

Additionally, the LME showed a decline in other metal prices, with aluminium down 0.7% to $2,641.5 per ton, lead decreased 0.8% to $2,040, zinc fell by 0.4% to $2,907, tin dropped 2.1% to $34,610, and nickel fell 0.8% to $16,150. In the Shanghai Futures Exchange (SHFE), copper declined 0.9% to 80,610 yuan ($11,252.64), aluminium fell 0.7% to 20,700 yuan, zinc remained steady at 23,770 yuan, lead decreased by 1.4% to 17,430 yuan, nickel fell by 0.9% to 129,190 yuan, and tin slid 1% to 276,150 yuan.

In summary, the decline in copper prices reflects the stronger dollar overshadowing potential positive developments from China’s strategy to stockpile industrial metals. The U.S. dollar’s strength exacerbates the vulnerability of metals priced in dollars, while factors such as U.S. policy actions toward domestic mineral production further influence the market dynamics. Overall, the impact of these developments on metal prices remains limited without further details regarding China’s stockpiling efforts.

Original Source: www.tradingview.com