LONDON – Copper prices pushed back on Wednesday on strong dollar pressure after the Federal Reserve reaffirmed its hawkish outlook.
Federal Reserve Chairman Jerome Powell has promised that the US Federal Reserve will set interest rates as high as necessary to stem the rise in inflation, which he said threatens the very foundations of the economy.
The comments pushed the dollar higher, reducing demand for value assets in U.S. units as it made them more expensive to holders of other currencies.
Sentiment, meanwhile, is under pressure from China’s “zero-covid” strategy, which has hampered global returns to the production of everything from mobile phones to electric vehicles. The ban is expected to be lifted from June 1.
“We’re concerned that metal prices are likely to peak in the first quarter of this year,” said Kirsten Maine, an analyst at Julius Bayer.
“Medium to long-term Chinese demand will struggle to recover from this lockdown,” he said, adding that the strong dollar has weighed on metal prices.
The benchmark copper on the London Metal Exchange (LME) fell 1.7% to $ 9,204 per tonne in 1633 GMT, breaking the three-session winning streak.
Alistair Munro at brokerage Marex said: “The metal market has been on a downward trend and this week’s rally was largely of a short covering nature.
Supply Chain: Pressure on global supply chains worsened in April as the coronavirus lockdown system in China and the war in Ukraine extended the delivery time and increased air freight costs between the United States and Asia, the New York Federal Reserve reported in a global supply index.
Inventories: Total copper stocks at LME-approved warehouses rose 2.5% to 180,925 tonnes. About 44% of it is scheduled for delivery and unavailable in the market.
Aluminum: China’s aluminum imports fell 37.7% in April compared to the same month a year ago, as overseas prices rose and domestic consumption weakened, official data showed on Wednesday.
Prices: LME aluminum down 1.6% to $ 2,845 per tonne, zinc down 2.3% to $ 3,577, lead down 2.5% to $ 2,050 and tin down 3.2% to $ 32,950, nickel down 0.9% to $ 260. (Reporting by Jandi Shabala; Editing by Elaine Hardcastle, Louis Heaven and Amelia Seithol-Mataris)