Base Metals See Modest Gains Amid Dip-Buying, Strong Dollar Caps Upside
Base metals prices largely traded higher on Monday, buoyed by dip-buying from physical consumers. However, gains were limited by a strong dollar and sluggish demand from China, which capped any significant upward movement.
Three-month copper on the London Metal Exchange (LME) inched up by 0.1% to $9,013.50 per metric ton by 0629 GMT. Aluminium rose 0.4% to $2,660.50, while nickel increased by 0.6% to $15,635. LME zinc advanced 0.3% to $2,956.50, lead was up 0.7% at $1,971, and tin gained 0.9% to $28,995.
On the Shanghai Futures Exchange (SHFE), the most-traded December copper contract eased slightly by 0.1% to 73,680 yuan ($10,176.09) per ton. SHFE aluminium fell 1.5% to 20,485 yuan per ton, while nickel rose 0.9% to 124,490 yuan. Tin remained nearly flat at 242,120 yuan, lead was unchanged at 16,785 yuan, and zinc slipped by 0.1% to 24,645 yuan.
"Consumers are attracted to buying because prices fell to a two-month low," said Sandeep Daga, director at Metal Intelligence Centre. "It is quite natural, but this dip-buying is unlikely to last. Speculators, not consumers, are the ones setting the trend for prices, and I would expect speculative selling to resume once dip-buying fades," Daga added.
Daga also projected that LME copper could decline to as low as $7,000 per ton in the second quarter of 2025, driven by a strong dollar, potential impacts from U.S. policies, and the diminishing effects of Chinese stimulus efforts.
The U.S. dollar rose on Monday, hovering near its one-year high, which made dollar-priced metals more expensive for holders of other currencies. A strong dollar is often seen as a headwind for metals markets, as it dampens demand from overseas buyers.
China, the world's largest consumer of metals, has been grappling with slowing economic growth. While the government has introduced policies aimed at revitalizing economic activity, these measures have yet to directly boost physical metals consumption.
Concerns over supply tightness outside of China also lent some support to prices after Beijing announced it would cancel export tax rebates for aluminium and copper products. This move could potentially limit exports, supporting prices in the medium term.
