Copper prices fell due to a stronger dollar, despite reports of China’s plans to boost strategic reserves. The LME benchmark for copper declined 0.9%, while several other metals also faced reductions in price. U.S. policy changes to increase domestic critical minerals production were noted as additional market influences.
On Friday, copper prices in London declined, impacted chiefly by a stronger dollar which overshadowed a positive report regarding China’s plans to enhance its strategic reserves of key industrial metals. According to Bloomberg News, the National Food and Strategic Reserves Administration was inquiring about prices and bidding for various metals, including cobalt, copper, nickel, and lithium, though specifics on volumes or timing remain undisclosed.
As of 0707 GMT, the benchmark three-month copper price on the London Metals Exchange (LME) experienced a 0.9% drop, settling at $9,853 per metric ton. A trader emphasized that the news about strategic purchasing had minimal effect on metal prices due to the vagueness of the information provided.
The dollar strengthened, attributed to the U.S. Federal Reserve signaling no immediate plans to reduce interest rates. The dollar index (DXY) rose by 0.3% to 104.06, following a 0.36% increase on the previous day. A robust U.S. currency makes dollar-denominated metals more costly for international buyers.
In a related context, U.S. President Donald Trump leveraged emergency powers to boost domestic production of critical minerals like lithium and nickel, aiming to diminish China’s dominance in this sector while addressing future demand for electric vehicle batteries.
Other metals on the LME also faced declines: aluminium dropped 0.7% to $2,641.5 per ton, lead fell 0.8% to $2,040, zinc lost 0.4% to $2,907, tin decreased by 2.1% to $34,610, and nickel fell 0.8% to $16,150. Similarly, on the Shanghai Futures Exchange (SHFE), copper, aluminium, and nickel saw declines, with copper down 0.9% to 80,610 yuan per ton, and nickel decreasing by 0.9% to 129,190 yuan.
In summary, copper prices have dipped primarily due to the strengthening of the U.S. dollar, which has offset the potential lift from China’s strategic stockpiling intentions. The overall metal markets mirrored this trend, with several other metals also seeing declines. Additionally, U.S. policy shifts aimed at increasing domestic mineral production further complicated the market dynamics.
Original Source: www.tradingview.com
