LME base metals remain under pressure from strong dollar, demand worries

Base metals prices on the London Metal Exchange were mostly lower during morning trading on Monday September 26, with the strong dollar and demand concerns still weighing on the market

Three-month prices at 09:05am London time, compared to the 5pm close on Friday

  • Copper: $7,369 per tonne, down 0.8%
  • Aluminium: $2,159.50 per tonne, down 0.2%
  • Nickel: $23,000 per tonne, down 1.7%
  • Zinc: $2,953.50 per tonne, down 1.8%
  • Lead: $1,791 per tonne, down 0.7%
  • Tin: $20,595 per tonne, up 1.7%

The three-month copper price hit a low of $7,292 per tonne earlier this morning, before recovering some of its losses.

High volumes of copper have been traded so far on Monday morning, with more than 7,166 lots traded by 9:13am London time. By comparison, the next best-traded metal was aluminium with 3,699 lots traded by the same time.

The dip in copper prices comes just as stocks edge higher, with 4,325 tonnes of copper delivered into LME sheds on Monday – in Busan, South Korea; Hamburg, Germany; and Rotterdam in the Netherlands.

Total copper stocks now sit at 129,000 tonnes, compared to 114,325 tonnes at the beginning of September.

“This week is starting where last week finished, with sellers sensing the nervousness of the bulls as the industrial picture around the world getting worse, [with] buyers of physical metal backing off at a substantial rate as order books contract,” the chief executive of Kingdom Futures Malcolm Freeman said.

“In addition to this, there is the growing strength of the US dollar as the Fed sticks to its use of the interest rate weapon with more rises to come before the end of the year,” he added.

The US Dollar Index was recently at 113.33 – up 0.27% from Friday’s close.

The zinc price has fallen below the $3,000 per tonne support barrier, hitting a low of $2,950.50 per tonne earlier on Monday. Despite continuing concerns over energy costs, the metal is now 14% lower than at the beginning of September when it opened at $3,460 per tonne.

Nickel and aluminium prices, meanwhile, also remain under pressure, with aluminium hitting a low of $2,139 per tonne on Monday morning and nickel trading in a wide range from $22,860 per tonne to $23,355 per tonne.

“Russia’s nuclear saber-rattling has raised geopolitical tensions in Europe to uncharted territory as Russia’s unprovoked invasion of Ukraine now risks a spillover – with no signs of a potential resolution in sight. Although there is no clear sign how that may impact flows of the base metals, such as aluminium and nickel, that Russia exports, further sanctions on these metals could be considered if the situation worsens,” Fastmarkets analyst Andy Farida said on Monday.

“Still, rising geopolitical tensions have sent the dollar index – which acts as a haven asset – surging to its highest level since 2002. Against such a backdrop, commodities, currencies and demand for risk assets are likely to remain under pressure,” he added.

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