Copper edges higher after sharp selloff; dollar, oil strength cap gains
CPER•Copper rose 0.30% to $14,456 a metric ton on the London Metal Exchange after falling 1.4% in the previous session. A strong dollar, elevated oil prices and concerns about Chinese demand capped gains.
1. Copper rebounds modestly
Benchmark three-month copper rose 0.30% to $14,456 a metric ton by 0700 GMT, while the most-traded Shanghai contract edged up 0.13% to close at 109,570 yuan a ton. LME copper fell 1.4% on Monday to its lowest in more than 10 days after weak Chinese industrial profits data added to pressure from rising oil prices and a stronger dollar.
2. Chinese demand concerns
Traders are awaiting China’s manufacturing purchasing managers’ data due later this week. Restocking ahead of China’s seven-day National Day holiday, which begins Thursday, is slowing. Chinese broker Galaxy Futures analysts said downstream copper users had largely completed pre-holiday restocking and were buying only as needed after the recent price decline.
3. Oil and dollar pressure
Brent crude hovered above $106 a barrel as concerns over Middle East supply disruptions persisted, while the dollar index hovered near a two-month high, supported by rising Treasury yields. Markets were pricing in more than a 70% chance of another Federal Reserve rate increase in October; higher rates can crimp copper demand, the article said.
