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    Profit-taking, lack of China interest weigh on copper

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    By Reuters

    Copyright brecorder

    Profit-taking, lack of China interest weigh on copper

    LONDON: Copper slipped on Tuesday as a lack of buying interest in leading consumer China prompted profit-taking after prices rallied to 15-month highs the previous day while a lower dollar helped limit losses, traders said.

    Benchmark copper on the London Metal Exchange fell 0.4percent to USD10,144 a metric ton in official open-outcry trading. On Monday, it touched USD10,192.50 a ton for the highest since June last year. Copper’s rapid climb through the USD10,000 a ton psychological level this month has sidelined Chinese buyers, traders said.

    Financial and commodity markets are waiting for a decision on US interest rates from the Federal Reserve, which meets Tuesday and Wednesday. Expectations of a cut have weighed on the US currency, which when it falls makes dollar-priced metals cheaper for holders of other currencies and could boost demand.

    “Given a high degree of market consensus surrounding the probability of a rate cut, it is likely that investor and trader positioning has been taking place well in advance, which will blunt the immediate effect of any such mechanisms,” Benchmark Mineral Intelligence analysts said in a note.

    Traders said funds were squaring their bets on higher copper prices ahead of the Fed decision and that a pick-up in copper stored in warehouses monitored by the Shanghai Futures Exchange had reinforced concerns about China demand.

    Focus is also on zinc stocks in LME-approved warehouses which at 48,975 tons have dropped 60percent since the middle of July. Cancelled warrants or metal marked for delivery at 36percent indicate another 17,600 tons are due to leave the LME system. Low stocks have fuelled concern about the availability of zinc on the LME market and created a premium or backwardation for the cash contract over the three-month forward.

    Last week the premium climbed above USD30 a ton to its highest since October last year. It closed around USD27 a ton on Monday. Three-month zinc was down 0.1percent at USD2,983 a ton after earlier matching Monday’s six-month high at USD2,985.

    LME aluminium was up 0.6percent at USD2,717 a ton, lead dipped 0.1percent to USD2,001, tin climbed 0.3percent to USD34,725 and nickel eased 0.1percent to USD15,415.

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