Copper price hits three-week low as inventories rise and dollar strengthens
Three-month LME copper was down 1.6% at $14,005.50 a ton at 1600 GMT after touching $13,958, its lowest since August 20. The metal has now fallen 6.2% from the record high reached last Thursday, when prices briefly appeared on course to test the $15,000 mark.
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Inventories ease supply concerns
Copper’s latest retreat comes as signs of tighter near-term supply have started to fade. LME copper inventories rose by 9,600 tons, including 4,550 tons delivered into warehouses in Italy.
The increase has helped ease some of the supply tightness that had supported prices during the metal’s recent rally. The cash LME copper contract’s discount to the three-month forward contract widened to $39.25 a ton from about $10 on Friday, another indication that immediate supply conditions were becoming less stretched.
“Copper has led the decline and now looks to be challenging recent lows, extending the cautious tone following the first weekly loss since June,” Neil Welsh, head of metals at Britannia Global Markets, wrote in a note, according to Reuters. Welsh also said concerns about tighter US monetary policy were weighing on risk appetite.
The Federal Reserve is due to hold its latest policy meeting on Tuesday and Wednesday. Higher interest rates can weigh on commodities by raising borrowing costs and potentially slowing economic activity.
US tariff uncertainty adds pressure
The copper market was already under pressure after a sharp selloff last Thursday, when Reuters reported that the White House had yet to decide whether to impose tariffs on refined copper imports.
The uncertainty reduced the incentive to move copper into the US COMEX exchange, narrowing the arbitrage opportunity that had helped drive a prolonged build-up in inventories there.
COMEX copper stocks fell slightly to 767,504 short tons, or 696,268 metric tons, ending a run of 58 consecutive daily increases.
The latest moves suggest that the market is shifting from a period dominated by concerns over tight supply towards one where inventories, monetary policy and trade uncertainty are increasingly influencing prices.
The weakness was not limited to copper. Aluminium fell 0.3% to $3,242 a ton, while zinc dropped 2.1% to $3,798, also touching a three-week low.
Lead fell 0.6% to $1,880.50, its lowest since August 3. Nickel declined 0.7% to $16,350, marking a two-month low, while tin dropped 2.4% to $52, its weakest level since July 17.
The broad-based declines underline the more cautious tone across industrial metals as investors assess the potential impact of US trade policy and monetary conditions on demand and prices.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)
