Soft Dollar Spurs Rally in Nonferrous Metals Market
Nonferrous metals saw prices climb in Thursday's trading, buoyed by a retreating U.S. dollar as investors recalibrated their expectations for the country's interest rates. The trend of the dollar distancing itself from recent highs is creating a more favorable environment for metal commodities priced in the greenback.
Copper, a bellwether for economic health, witnessed a 0.6% increase to $9,642 per metric ton on the London Metal Exchange as of the early hours of the morning GMT. Concurrently, the Shanghai Futures Exchange reported a more pronounced uptick, with June copper contracts surging 1.7% to reach 77,980 yuan, or roughly $10,778, per ton.
This uptick aligns with market sentiments following comments from U.S. Federal Reserve officials, which have solidified the notion that tight monetary policy could be the norm for an extended period. However, the consequent softening of the dollar has rendered metals more affordable for holders of other currencies, stimulating purchasing activity.
The LME reflected this positive sentiment across the board with aluminium up by 0.2% at $2,591 a ton, nickel making a modest gain of 0.3% to $18,295, and lead rising by 1% to $2,177.50. Tin also joined the upward trend with a 0.6% rise to $32,960. Zinc, however, bucked the trend with a slight dip of 0.1% to $2,837.50.
In the East, the Shanghai Futures Exchange mirrored these gains with aluminium, nickel, zinc, lead, and tin all marking increases, with nickel and tin seeing notable jumps of 1.9% and 2.2%, respectively.
China’s considerable leap in unwrought aluminium and product imports, which skyrocketed by almost 90% in March, also played a part in the metals' price dynamics.
The supply outlook presents a mixed picture, with Chile’s Codelco, a top copper producer, signaling a slow growth trajectory for the year and setting a long-term goal for 2030. Last year, the miner's production dipped to the lowest in 25 years, which could have lingering effects on supply perceptions.
Meanwhile, a significant drawdown in LME aluminium inventories — now at the lowest point since December of the previous year — is tightening the market. The cache of available aluminium has dwindled, evidenced by the cash-to-three-month discount narrowing sharply in recent days.
