Copper drops to three-week lows as inventories rise; focus on oil
XLB•Other base metals move mixed
Aluminium CMAL3 rose 0.3% to $3,254, zinc CMZN3 climbed 0.8% to $3,823, lead CMPB3 ceded 0.4% to $1,874, tin CMSN3 rose 0.5% to $52,140 and nickel CMNI3 retreated 2.4% to $15,940.
Copper hits three-week low as LME inventories climb
Copper prices fell on Tuesday, hitting their lowest levels in more than three weeks, as inventories at the London Metal Exchange climbed and growth concerns were reinforced by rising oil prices.
Benchmark copper CMCU3 on the LME was up 0.6% at $14,084 a metric ton at 1608 GMT, recovering from $13,926 earlier in the session, the lowest since August 20. Traders said short covering and a perception that copper was cheap helped the metal rebound after New York opened.
Copper stocks in LME registered warehouses have risen nearly 20% since the middle of August to 242,900 tons, due to elevated premiums for nearby contracts against longer-dated forwards 0#MCU:.
Traders expect more copper sold at previously high prices to be delivered to LME warehouses over coming days. But with the premiums flipping into discounts last week, deliveries are likely to dry up pretty quickly, they added.
Tariff uncertainty and oil prices weigh on demand outlook
Copper prices across maturities started to fall last week after sources told Reuters that U.S. President Donald Trump had not yet made a decision on whether to impose tariffs on copper imports.
The possibility of tariffs on U.S. copper imports pushed Comex copper prices above LME prices. Traders have, for the past 18 months, shipped copper to the United States, taking Comex stocks to record highs.
"Nothing good can come of confusing markets with what is essentially government policy," said Panmure Liberum analyst Tom Price. "My gut feeling is he will impose it at some point otherwise we're going to see the biggest trade reversal in the history of copper."
