Copper retreats on firmer greenback after best week in more than a year

LONDON — Copper fell on Monday as a firmer dollar prompted some profit taking in the metal after its biggest weekly rise in more than a year, while aluminum rose as the US said it was considering import tariffs on the metal.

Copper, widely used in construction, surged by seven percent last week as a rebound in stock markets showed increasing appetite for risk, and as the dollar tumbled, boosting the appeal of assets priced in the US currency.

“Financial markets have had quite a volatile month, and that has also been the case for copper,” Danske Bank analyst Jens Pedersen said.

“Today it could simply be a case of the dollar strengthening a bit, and that weighing on base metals,” he added.

“We are heading for another round of manufacturing PMIs ( purchasing managers index) this week, which is a gauge of how industrial activity is doing — whether it is still moving ahead at a relatively strong pace, which should cap downside for copper and other base metals, or whether it is close to a peak. That is what the market is looking at right now.”

London Metal Exchange (LME) copper closed down 1.6% at $7,118 a ton. With many Asian markets closed for the Lunar New Year break and US markets also shut for Presidents Day, volumes were exceptionally light across base metals. Copper stocks in LME warehouses rose another 5,500 tons to 338,275 tons, exchange data showed on Monday, their highest since May last year.

The dollar index recovered to rise 0.10% on Monday as investors bought back the greenback following its plunge to three-year lows.

Hedge funds and money managers cut their net long positions in COMEX copper contracts in the week to Feb. 13, US Commodity Futures Trading Commission data showed on Friday.

US Commerce Secretary Wilbur Ross unveiled options on Friday for hefty US steel and aluminium import restrictions. The Section 232 reviews contained global tariff options of at least 24% on steel products and at least 7.7% on aluminum products.

LME aluminum finished 0.30% higher at $2,214 a ton. Nearly 90% of US aluminum demand last year was met by imports, according to Commerzbank. The premium for cash over three-month aluminum jumped to its highest since late August at $10 a ton on Monday, from a discount of $ 1.50 at the end of last week, suggesting nearterm tightness in the market.

LME nickel ended the day down 2.3% at $13,600 a ton, LME zinc closed down 0.60% at $3,555 a ton, lead ended 1.5% lower at $2,575 a ton and tin finished down 0.80% at $21,575 a ton. —