Metals-copper Dips As Inflation Rises In The U.S. And China

LONDON, Nov 10 (Reuters) – Copper edged lower on Wednesday as high inflation readings in China and the United States added to concern over slowing economic growth and central bank tightening.

Benchmark copper on the London Metal Exchange (LME) dipped 0.2% to $9,539 a tonne by 1700 GMT.

Prices are up by about 23% this year after rising 26% in 2020, but they have lost momentum since reaching a record high of $10,747.50 in May.

Data showed that Chinese factory gate prices rose at the fastest pace in 26 years last month and U.S. consumer prices increased more than expected.

That raises the prospect of faster interest rate rises in the United States and reduces the chances of rate cuts to stimulate growth in China.

“The dollar index is up as traders believe that the Fed is behind the curve and they need to do something to control the pace of inflation,” analyst Naeem Aslam at Ava Trade said in an email.

A firmer dollar makes commodities priced in the U.S. currency more expensive for buyers using other currencies.

China’s metals-intensive construction sector, meanwhile, is engulfed in a debt crisis, with property developer China Evergrande Group facing a bond repayment deadline on Wednesday.

The downside was limited by signs of tight supply. Copper inventories — at least those in warehouses that publish data — are so low that traders are paying large premiums to get their hands on metal.

Copper prices will rise over the longer term as the world transitions to cleaner energy and needs more copper to conduct electricity, said WisdomTree analyst Nitesh Shah.

"It's quite a nice buying opportunity right now," he said.

MARKETS: U.S. and Chinese stock markets fell and the U.S. dollar strengthened.

STOCKS: On-warrant copper inventories in LME-registered warehouses rose to 46,150 tonnes but quickly deliverable cash metal still costs about $250 more than the three-month contract, suggesting tight supply. MCUSTX-TOTALCMCU0-3

Stockpiles in China have fallen sharply. CU-STX-SGHSMM-CUR-BON

TIN: China has closed a border crossing with Myanmar, further disrupting tin concentrate imports, sources said.

OTHER METALS: LME aluminium gained 1% to $2,582.50 a tonne, zinc added 0.2% to $3,289.50, nickel advanced 1.8% to $19,745, lead rose 0.2% to $2,345, but tin shed 0.7% to $37,150. (Reporting by Peter Hobson Additional reporting by Mai Nguyen in Hanoi Editing by David Goodman, Kirsten Donovan)