Copper falls, under pressure from firm dollar
By Polina Devitt
LONDON, Oct 12 (Reuters) - Copper prices fell on Thursday after U.S. inflation data boosted the dollar, though measures to support the economy of top metals consumer China and stronger demand limited the drop.
Three-month copper on the London Metal Exchange (LME) was down 0.4% at $7,990 per metric ton at 1615 GMT.
Prices retreated after data showed U.S. consumer prices increased slightly more than expected in September, but that underlying inflation slowed.
The dollar index surged after the data, which prompted traders to expect a greater chance of the Federal Reserve delivering another interest rate hike this year.
A firmer dollar makes commodities priced in the U.S. currency more expensive for buyers using other currencies.
Copper prices were supported by the Yangshan copper premium <SMM-CUYP-CN>, which climbed to $70 a ton, the highest since December 2022, signalling solid demand for metal imports in China.
"This week, we are seeing greater interest in stockpiling from China, as downstream companies did not restock enough ahead of a week-long holiday," Sucden brokerage said in a note.
Copper stockpiles at LME-registered warehouses <MCUSTX-TOTAL> hit a two-year high of 181,150 tons, LME daily data showed, but on-warrant inventories dropped to 175,100 after fresh cancellations of 3,525 tons. <0#MCUSTX-LOC-GRD>
A discount for the cash over the LME three-month copper contract <CMCU0-3> stood at the 31-year high of $77.5 per ton at the market close on Wednesday. It was last at $74 on Thursday.
"The short-term outlook remains bearish for metals demand and we do not foresee a substantial recovery before next year," said ING analyst Ewa Manthey.
"Metals prices should continue to trade under pressure in the fourth quarter, with the only upside risk being if Chinese demand recovers faster than anticipated."
LME aluminium was 0.3% lower at $2,206.5 a ton after hitting its lowest since Sept. 18 at $2,195, zinc touched its lowest since Sept. 11 at $2,441 and was last down 1.3% at $2,443.5, while lead was down 1.6% at $2,060 after touching its lowest since July 11 at $2,052.
Tin was flat at $24,915. Nickel climbed 2.1% to $18,760 after hitting its lowest since July 2022 on Wednesday. (Reporting by Polina Devitt in London; additional reporting by Mai Nguyen in Hanoi and Eric Onstad in London Editing by Mark Potter, Kirsten Donovan)
