Jan. 5 (Reuters) – Copper prices in London eased on Wednesday as the dollar held on amid expectations of early U.S. interest rate hikes, although supply was tight against a backdrop of Growing demand is expected to maintain the underlying metal this year.
Three-month copper on the London Metal Exchange was down 0.3% to $ 9,734.5 per tonne at 08:35 GMT. On Tuesday, prices hit $ 9,812, their highest since November 25.
The most-traded copper contract in February on the Shanghai Futures Exchange closed 0.4% higher at 70,110 yuan ($ 11,003.00) per tonne.
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The dollar index hovered near a two-week high reached in the previous session, as investors braced for interest rate hikes from the US Federal Reserve by the middle of the year. The greenback hit a five-year high against the Japanese yen.
As a firmer dollar makes metals more expensive to the greenback for holders of other currencies, a rise in interest rates could reduce liquidity in financial markets and slow the recovery in the world’s largest economy.
“As we see further growth in supply with projects entering production, we are still seeing inventory levels remain at near historically low levels, which supports the pricing outlook,” Craig said. Lang, analyst for CRU, adding that a surplus of 50,000 tonnes of refined copper is now seen in 2022, “which is a very small amount.”
“We are seeing an increasing proportion of demand from green energy applications, which is expected to account for 40% of the growth in demand for refined copper in 2022 – this will remain the main driver of demand for years to come.”
Mandatory copper stocks in LME-registered warehouses stood at 81,400 tonnes, down from a historic low of 14,150 tonnes in October, but well below peaks seen in August 2021.
As of last week, ShFE warehouse stocks stood at 38,182 tonnes, nearing an over 12-year low of 27,171 tonnes reached in the week ended December 24.
Among other industrial metals, aluminum LME rose 0.7% to $ 2,860 per tonne, nickel fell 2.2% to $ 20,665 per tonne, lead edged up 0.4% at $ 2,307 per tonne, tin was down 0.1% to $ 39,150 per tonne and zinc was down 0.3% to $ 3,594.5 per tonne. tonne.
* Aluminum ShFE rose 0.7% to 20,380 yuan per ton, while nickel gained 0.3% to 152,160 yuan, zinc rose 1.3% to 24,415 yuan, and lead fell 1.5% to 15,200 yuan. Tin climbed 1.8% to 295,520 yuan per ton, after hitting a record high of 297,900 yuan.
* Chile’s total copper production in November fell 0.6% year-on-year to 481,800 tonnes, due to declines at state-owned Codelco and the giant Escondida mine, the Chilean Copper Commission reported on Tuesday.
* Indonesian coal miners are due to hold talks with government officials on Wednesday over a ban on the country’s coal exports that has pissed off global fuel markets and triggered energy security concerns in some major economies. Read more
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Reporting by Eileen Soreng in Bangalore; edited by Subhranshu Sahu and Jason Neely
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