Copper extended its decline on Tuesday amid fresh uncertainty surrounding the US monetary policy and eased concerns over global supply.
Prices dropped as much as 2.4% amid a broader decline in base metals. By 1 p.m. ET, three-month copper traded at roughly $10,855 per tonne on the London Metal Exchange, while those on the COMEX were priced at $5.013 per lb. (about $11,050/t).
With a cooldown in global trade tensions, investor focus has now shifted to the US Federal Reserve policy and the outlook for China’s wavering economy.
A series of remarks from Fed officials has offered contrasting views on what’s next for US rates, after Chair Jerome Powell warned that a December cut wasn’t a foregone conclusion. Among them, Chicago Fed President Austan Goolsbee said he’s more concerned about inflation than the job market.
The shifting outlook for US monetary policy has pushed up the dollar to its highest since May, adding to pressure on metals that rallied last week in the run-up to Washington and Beijing’s trade truce.
So far this year, copper has rallied more than 20%, buoyed by a series of disruptions at some of the world’s top mines, including a collapse at Chile state copper miner Codelco’s El Teniente mine.
Earlier, the miner said it expects output to rise this year and the next, helping to ease tensions around global supply that helped push prices to an all-time high last week.
“While the supply disruptions admittedly are significant, in our view they are still not sizable enough to push the copper market into deficit,” Carsten Menke, head of next-generation research at Julius Baer Group, said in an emailed note to Bloomberg.
“This is because demand is not overly dynamic either, and we do not expect it to strengthen due to the easing of the trade tensions between the US and China.” (With files from Bloomberg)
