Copper Prices Decline Amid Strong Dollar and China’s Stockpiling Plans
Copper prices fell in London due to a stronger U.S. dollar, counterbalancing positive news of China’s plans to expand metal reserves. The dollar’s strength is linked to the Federal Reserve’s stance on interest rates. U.S. actions to increase critical mineral production also influence market dynamics.
On Friday, copper prices in London experienced a decline as a stronger U.S. dollar diminished the positive effect of a media report indicating China’s plans to bolster its strategic reserves of essential industrial metals. The National Food and Strategic Reserves Administration is reportedly evaluating and bidding for metals such as cobalt, copper, nickel, and lithium, although specifics regarding quantities and timelines were not disclosed.
As of 0707 GMT, the three-month copper benchmark on the London Metals Exchange (LME) decreased by 0.9% to $9,853 per metric ton. A trader noted, “The strategic buying news does not substantially influence metal prices today due to the lack of details.”
The dollar strengthened, supported by signals from the U.S. Federal Reserve suggesting no imminent reduction in interest rates. Following a rise of 0.36% on Thursday, the dollar index increased by 0.3% to 104.06. A strengthened U.S. dollar raises prices for dollar-denominated metals for international buyers.
On a related note, U.S. President Donald Trump invoked emergency powers to enhance domestic production of critical minerals such as lithium and nickel, aiming to counteract China’s dominance in this sector and satisfying the anticipated demand for electric vehicle batteries.
Other metal prices also witnessed a decline; LME aluminum dropped 0.7% to $2,641.5 per ton, while lead fell 0.8% to $2,040. In addition, zinc decreased by 0.4% to $2,907, tin was down 2.1% at $34,610, and nickel declined by 0.8% to $16,150. On the Shanghai Futures Exchange (SHFE), copper lost 0.9% to 80,610 yuan ($11,252.64) per ton. SHFE aluminum fell 0.7% to 20,700 yuan, while lead dropped 1.4% to 17,430 yuan. Nickel lost 0.9% to 129,190 yuan, and tin slid 1.0% to 276,150 yuan.
In summary, while there were indications of China’s plans to increase its strategic metal reserves, the stronger U.S. dollar ultimately overshadowed this positive sentiment, leading to a dip in copper prices and other metals on the exchanges. The market’s response reflects the complex interplay between currency strength and commodity pricing, exacerbated by geopolitical moves to boost domestic mineral production in the United States.
Original Source: www.tradingview.com
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