Stronger dollar drives copper prices lower
London (Oct 27) Copper prices declined for a third day on Friday and other industrial metals also fell after the U.S. dollar strengthened to a three-month high, making metals more expensive for holders of other currencies.
The stronger dollar and profit-taking by investors was driving prices down, but the outlook was good, said Robin Bhar, head of metals research at Societe Generale.
"We're still holding at relatively high prices underpinned by economic growth and demand coming through, as reflected in inventory drawdowns," he said.
COPPER: Benchmark copper on the London Metal Exchange was down 1.4 percent at $6,892 a tonne at 1004 GMT after touching $6,880, the lowest since Oct. 16. The metal used in power and construction was set to end the week down 0.8 percent, the first weekly fall in five weeks.
TECHNICALS: Support would kick in around $6,850 a tonne, said brokers Marex Spectron in a note.
STOCKS: On-warrant inventories available to the market in LME-registered warehouses fell by 5,975 tonnes to 163,250 tonnes, down from 221,875 tonnes in mid-October and the lowest in six weeks, providing some support to prices. DOLLAR: The dollar rose to a three-month high, potentially reducing demand for dollar-denominated metals, after the European Central Bank extended its bond purchases and the U.S. House of Representatives voted to clear a procedural path for tax cuts. CHINA OUTPUT: China has met its target for cutting steel capacity this year but the country must continue pushing ahead with capacity reductions in other sectors including aluminium and cement, the industry ministry said on Friday. CHINA STEEL: Steel futures on the Shanghai Futures Exchange fell for a second day, ending the week 1.6 percent lower and putting pressure on stainless steel ingredient nickel and zinc, used to rustproof steel. NICKEL/ZINC: LME nickel was down 2.1 percent at $11,510 a tonne, on track for a weekly loss of 1.9 percent, and zinc was down 2.3 percent at $3,151.50 a tonne but set for a weekly gain of 1.7 percent.
ZINC STOCKS: Adding pressure on prices was a 5.6 percent rise in inventories in warehouses monitored by the Shanghai Futures Exchange from last Friday to 71,558 tonnes. PRICES: Aluminium was down 1.9 percent at $2,149.50 a tonne, lead was 1.8 percent lower at $2,439 and tin had lost 0.3 percent to $19,790.
Reuters
