Copper Slip on Dollar Strength, Downbeat China Data

Copper prices fell on Tuesday over a dismal demand outlook driven by a stronger dollar and weak economic data from top metals consumer China.

• Federal Reserve: The ‘Dots’ as Interest Rate Anchors
• MCX Weekly Forecast: 03 To 07 July 2023 By Neal Bhai Research Report
• MCX Copper Tips

Three-month copper (CU) on the London Metal Exchange (LME) was down 0.5% at $8,357 per metric ton by 0543 GMT, while the most-traded August copper contract on the Shanghai Futures Exchange HG1! was almost flat at 68,050 yuan ($9,407.75) per metric ton.

Chinese factory activity slowed in June, reinforcing the fact that demand for metals was under pressure, though there were expectations the government could undertake more stimulus measures to shore up the economy.

The dollar DXY, which has been rising since mid-June on expectations of further U.S. rate hikes, was steady. A firmer dollar makes greenback-priced metals more expensive to holders of other currencies.

“We are revising down our 2023 average annual copper price forecasts to $8,800/T, from $9,000 previously, on the back of weak global demand,” Fitch Solutions analysis unit BMI said in a report.

Prices are expected to stay volatile in the coming months impacted by dollar moves and investor sentiment towards China’s manufacturing and construction sectors, the report said.

However, BMI expects copper prices will not drop significantly in 2023 due to tight inventories, projected weakening of the dollar in the second half, and improved demand from the Chinese construction sector in the coming months.

Combined copper stockpiles in LME, SHFE, COMEX and China bonded warehouses were last at 225,018 metric tons, down 55% from March and equivalent to only three days of global copper consumption in 2022, Refinitiv Eikon data showed.

LME aluminium ALI1! eased 0.2% to $2,153 per metric ton, nickel NICKEL1! shed 0.3% to $20,520, lead LEAD1! fell 0.5% to $2,082, tin FTIN1! dropped 0.3% to $27,285, while zinc ZNC1! declined 0.3% to $2,359.

SHFE aluminium ALI1! dipped 0.3% to 17,980 yuan per metric ton, nickel NICKEL1! eased 0.4% to 158,670 yuan, zinc ZNC1! fell 0.9% to 19,995 yuan, lead LEAD1! declined 0.4% to 15,530 yuan while tin FTIN1! rose 0.7% to 224,360 yuan.