Copper prices dip amidst a stronger U.S. dollar, overshadowing reports of China’s stockpiling plans for key metals. Specific details of these plans remain unclear, leading to limited market impact. Additionally, U.S. actions to boost domestic production of critical minerals are a strategic response to foreign competition.
On Friday, copper prices in London experienced pressure due to a stronger U.S. dollar, counteracting a media report indicating China’s intention to augment its strategic reserves of vital industrial metals. The National Food and Strategic Reserves Administration was reported by Bloomberg News to have made inquiries and bidding for various metals; however, specific details regarding volumes and timelines were not disclosed.
The metals under consideration for purchase encompass cobalt, copper, nickel, and lithium, as noted in the report. As of 0339 GMT, benchmark three-month copper prices on the London Metals Exchange (LME) fell by 0.3%, settling at $9,911 per metric ton. One trader mentioned that the news regarding strategic buying did not significantly affect metal prices due to the lack of comprehensive details.
The dollar strengthened amidst signals from the U.S. Federal Reserve indicating no immediate plans to lower interest rates. The dollar index rose by 0.2% to 103.96, building upon a 0.36% increase observed the previous day. A robust U.S. dollar renders dollar-denominated metals costlier for buyers using alternative currencies.
Furthermore, U.S. President Donald Trump invoked emergency powers on Thursday to bolster domestic production of essential minerals such as lithium and nickel, aiming to mitigate China’s supremacy in the sector and to satisfy expected demand for electric vehicle batteries. Concurrently, commodity prices on the LME reflected mixed results, with aluminum falling 0.4% to $2,649.5 per ton, lead decreasing by 0.7% to $2,042, and nickel dropping by 0.6% to $16,180.
In the Shanghai Futures Exchange (SHFE), copper prices fell by 0.3% to 81,110 yuan ($11,252.64) per ton, while aluminum also declined by 0.3% to 20,775 yuan. Conversely, zinc saw a slight increase of 0.1% to 23,775 yuan, and tin gained 0.6% to reach 280,710 yuan. The fluctuations in these metal prices reflect the ongoing dynamics of the market influenced by global economic conditions and strategic initiatives in the production sectors.
In conclusion, copper prices are currently facing downward pressure as a result of a stronger U.S. dollar, despite China’s exploration of expanding its strategic metal reserves. The lack of specific details regarding China’s purchasing plans has also contributed to a muted impact on prices. Additionally, domestic initiatives in the U.S. to increase critical mineral production aim to counteract foreign dominance in the sector, highlighting ongoing tensions in global commodities markets.
Original Source: www.tradingview.com
