LONDON – Copper prices bounced on Tuesday as the dollar eased, but worries about global growth and demand due to interest rate hikes and climbing inventories still dominate sentiment.
Benchmark copper on the London Metal Exchange (LME) traded up 0.4% at $7,369.50 a tonne at 1500 GMT. It fell to $7,292 a tonne on Monday, a drop of 32% since hitting a record high of $10,845 a tonne in March and the lowest since July 21.
U.S. Comex copper futures gained 0.8% to $3.32 a lb.
“Markets are trading the macro at the moment and copper is no exception. Any weakness in the dollar will trigger a relief rally, even if only in the short term,” said Sucden Financial analyst Geordie Wilkes.
“But given the weak fundamentals, we expect copper prices to continue to trend lower.”
The dollar slipped against major peers, making dollar-priced commodities cheaper for holders of other currencies, which could help boost demand if the trend persists.
This relationship is used by funds which trade using short-term buy and sell signals from numerical models.
However, capping copper’s price gains are expectations of shrinking demand for the metal in Europe due to a manufacturing recession caused by the energy crisis.
Clues to demand prospects will also come on Friday from surveys of purchasing managers at manufacturers in top metals consumer China, where COVID lockdowns have significantly undermined industrial activity.
Copper stocks in LME-approved warehouses, at 130,850 tonnes, are up nearly 30% since Sept. 15, and cancelled warrants – metal earmarked for delivery – at 7% down from 50% in late August. Both have eased concerns about availability on the LME market.
LME lead prices edged up 0.1% to $1,757 a tonne, not far from two-year lows of $1,748 a tonne hit on Monday.
Expectations of sliding demand for the battery material from the auto sector, despite the approach of winter when demand for replacement batteries typically rises, are behind the sell-off.
Aluminium was down 0.6% at $2,126 a tonne, zinc slipped 2.2% to $2,920, tin gained 0.9% to $20,830 and nickel dipped 0.3% to $22,130.