Mumbai, 14 Feb (Commoditiescontrol): Copper prices experienced a moderate decline on Wednesday, influenced by increased speculative selling in response to the latest U.S. inflation data. This data prompted concerns over potential delays in reducing high-interest rates.
By 4 PM IST, three-month copper on the London Metal Exchange (LME) decreased by 0.4%, settling at $8,229 per metric ton.
The U.S. inflation report, released on Tuesday, revealed a higher-than-expected rise in consumer prices for January. This led to a revision of trader expectations regarding the timeline and extent of anticipated interest rate cuts.
As per experts, federal funds futures now suggest no rate cut in March and less than a 50% likelihood of easing in May.
Speculators have recently taken a definitive stance on copper, trending towards short-selling and long-position liquidations. This might exert further downward pressure in the short term, but support levels are expected around the $8,000 mark. Since reaching a one-month high of $8,704.50 on January 31, LME copper has dropped 5.5%, influenced by concerns over Chinese demand and diminishing expectations for interest rate cuts.
The dollar index is currently trading near three-month highs, affecting the cost of dollar-priced metals like copper for non-dollar users. However, many analysts and investors maintain a positive outlook on copper, anticipating a recovery due to market tightness.
Copper's prospects remain strong due to ongoing supply challenges. Following recent mine closures, the concentrates market is particularly tight, leading to a significant drop in smelter processing fees.
In related developments, zinc prices fell by 0.3% to $2,308 a ton following increased metal inflows into LME warehouses, pushing the stock to a 32-month high of 254,825 tons. Other metals showed mixed performance: LME aluminium decreased by 0.7% to $2,211 a ton, tin declined by 1.3% to $27,205, while nickel and lead recorded gains of 0.3% to $16,315 and 0.7% to $2,012, respectively.
(By Commoditiescontrol Bureau; +91-9820130172)
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