Make Kitco Your Homepage

METALS-Copper slides from 7-month peak on firm dollar, profit-taking

Kitco News

* Declining LME copper stocks support price
* GRAPHIC-2019 asset returns: (Updates throughout, changes dateline from BEIJING)

By Zandi Shabalala

LONDON, Feb 21 (Reuters) - Copper prices slipped from seven-month highs on Thursday as the dollar firmed and investors cashed in gains from a rally in the previous session fuelled by falling inventories.

The dollar found strength in minutes from a U.S Federal Reserve meeting that raised expectations for a possible U.S. interest rate hike this year. Three-month copper on the London Metal Exchange was down 0.4 percent to $6,378.50 a tonne by 1104 GMT, after hitting its highest since July 10 at $6,426.50 in the previous session.

On Wednesday LME copper broke through the key technical resistance area of $6,400, which triggered profit-taking alongside a stronger dollar, said Saxo Bank commodities analyst Ole Hansen.

"But overall the story driving copper is the worries about supply," he said.

Miner and trader Glencore on Tuesday lowered its 2019 copper output forecast to 1.5 million tonnes from 1.54 million due to production cuts at its Mutanda mine in the Democratic Republic of Congo. "(That) supports the idea that supply is tightening in copper, and has helped it move ahead despite the headwinds from the uncertainty related to global economic growth," Hansen said.

The metal used in power and construction has seen inventories fall while supply has been constrained by lack of investment in mines and declining grades.

STOCKS: Stocks of copper in London Metal Exchange warehouses stand at 137,700 tonnes, close to 10-year lows of 122,500 tonnes hit in early December last year. DOLLAR: The U.S. currency gained against a basket of major currencies. A stronger greenback makes dollar-denominated commodities more expensive for non-U.S. firms, a relationship used by funds to generate buy and sell signals.

TRADE TALKS: The United States and China have started to outline commitments in principle on the stickiest issues in their trade dispute, the most significant progress yet toward ending a seven-month trade war, sources said. Signs of progress in trade talks usually boost metals and equities, but markets had been "brewing on that theme for too long and most of the positive news has been priced in already", said Saxo Bank's Hansen.

CHILE: Intense rains at the start of this month in Chile, the world's top copper miner, likely hurt productivity at state-owned miner Codelco's Chuquicamata and Radomiro Tomic mines, the country's mining minister said.

PRICES: Aluminium added 0.5 percent to $1,877.50, zinc eased 0.8 percent to $2,678, lead edged down 0.2 percent to $2,037, tin was steady at $21,255 while nickel shed 0.9 percent at $12,795.

(Additional reporting by Tom Daly in BEIJING, Editing by Jan Harvey)

LME price overview COMEX copper futures Base metals news All metals news All commodities news Metals diary Foreign exchange rates SPEED GUIDES ))
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.