LONDON – Copper prices fell on Wednesday under pressure from a stronger dollar after the Federal Reserve reconfirmed its aggressive outlook.
Federal Reserve Chairman Jerome Powell promised that the Federal Reserve would raise interest rates as high as necessary to end a rise in inflation that he said threatened the very foundation of the economy.
The comments pushed the dollar upward, undermining demand for dollar-denominated assets, as they made them more expensive for holders of other currencies.
Meanwhile, sentiment continues to be weighed down by China’s “zero-COVID” strategy, which has disrupted a global rebound in manufacturing of everything from cell phones to electric vehicles. The restrictions will be lifted on June 1.
“We are concerned that metal prices are likely to peak in the first quarter of this year,” said Julius Baer analyst Carsten Menke.
“Mid to long-term Chinese demand will struggle to recover from this lockdown,” he said, adding that the firmer dollar put pressure on metal prices.
Benchmark three-month copper on the London Metal Exchange (LME) lost 0.7% to $9,303 per tonne at 1050 GMT, breaking a three-session winning streak.
“Metal markets remain on a downward trend and this week’s rallies have been largely short-covering,” said Alastair Munro of brokerage Marex.
INVENTORIES: Total copper inventories in LME-approved warehouses increased 2.5% to 180,925 tons. About 44% of that is for delivery and is not available to the market.
ALUMINUM: China’s aluminum imports fell 37.7% in April from the same month a year earlier, as overseas prices rose and domestic consumption weakened, government data showed on Wednesday.
PRICES: LME aluminum was up 0.5% to $2,905 per ton, zinc was down 0.6% to $3,639, lead was down 0.8% to $2,085 and tin was down 1.3% to $33,615, nickel fell 0.8% to $26,180.
(Reporting by Zandi Shabalala; editing by Elaine Hardcastle)
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