Declining Copper Prices Amid Rising Dollar
Copper prices experienced a downturn on Wednesday, influenced by the strengthening of the U.S. dollar ahead of the Federal Reserve’s interest rate decision. The three-month copper contract on the London Metal Exchange saw a 0.4% decrease, standing at $8,321 per metric tonne as of early morning trading. In the Shanghai Futures Exchange, the most traded January copper contract also dropped by 0.2%, settling at 67,850 yuan (approximately $9,446.57) per tonne.
Influence of the Dollar and U.S. Economic Data
The rise in the dollar index followed an unexpected surge in U.S. consumer prices in November, fueling speculation that the Federal Reserve might refrain from rate cuts in the near future. A stronger dollar generally leads to a decrease in metals prices, making commodities costlier for holders of other currencies.
China’s Demand Outlook and Global Impact
Market sentiment was also affected by the outlook for demand from China, a major consumer of metals. According to ANZ analysts, a recent meeting of senior Chinese officials did not propose significant fiscal stimulus measures, leading to investor disappointment. This outlook is particularly relevant for copper, which is extensively used in sectors like energy, construction, and transportation. Despite these market conditions, Rio Tinto’s chairman expressed optimism about China’s economic growth potential, committing to the global miner’s long-term strategy in the country.
Other Metals Show Mixed Performance
In other metals trading, LME aluminum decreased by 0.1% to $2,118 per tonne, while tin dropped 0.2% to $24,540. Zinc fell by 0.5% to $2,418, and nickel was down 1.3% at $16,300, though lead saw a slight increase of 0.2% to $2,041. In the Shanghai market, aluminum, zinc, lead, and nickel also registered declines, while tin remained relatively stable. 
