Copper on track for biggest weekly drop in 15 months
18 Jun 2021
HANOI: London copper prices were set on Friday for their biggest weekly fall since March 2020 as the dollar firmed on the prospect of US interest rate hikes and after China announced a plan to sell part of its reserves of the metal.
Three-month copper on the London Metal Exchange was down 0.8 per cent at $9,242.50 a tonne by 0710 GMT, pushing its loss for the week to 7.6 per cent and putting it on track for its steepest weekly fall since March last year, when the coronavirus hit demand.
The most traded July copper contract on the Shanghai Futures Exchange dropped to 66,960 yuan ($10,394) a tonne, its lowest since April 15, before paring some losses to close at 67,260 yuan a tonne, still down 2.6 per cent.
The dollar was headed for its biggest weekly gain in nearly nine months as investors scrambled to price in a sooner-than-expected ending to extraordinary US monetary stimulus in the days after a surprise shift in tone from the Federal Reserve.
A stronger dollar makes greenback-priced metals more expensive and less appealing to holders of other currencies.
“Metals were suffering from equity markets that started to fall, and tapering and potential rises in interest rates unnerving investors,” said Malcolm Freeman, a director at UK broker Kingdom Futures.
“It felt like the investment community was reducing its exposure.”
Prices had already been under pressure after top metals consumer China announced a plan on Wednesday to sell state reserves of copper, aluminium and zinc in an effort to curb a strong price rally in commodities.
- LME aluminium fell 0.3 per cent to $2,392 a tonne, nickel rose 1 per cent to $17,345 a tonne, ShFE aluminium dropped 1.8 per cent to 18,380 yuan a tonne and zinc shed 3.1 per cent to 21,935 yuan a tonne.
- The speculative net long in SHFE copper declined to 9.5 per cent of open interest on Thursday, the lowest since Nov 24 last year and down from a mid-May high of 54.7 per cent, Marex Analytics data showed.
- A single party controls 50 per cent-80 per cent of available zinc stocks and short-term futures, LME data showed.
($1 = 6.4419 yuan)