Copper slips after China factory data, dollar weigh

LONDON — Copper prices sank to their lowest in over two weeks on Wednesday as the dollar advanced on prospects of higher interest rates and growth in China’s manufacturing sector slowed in February.

Benchmark copper on the London Metal Exchange (LME) fell 1.3% to $6,932 per ton, its lowest since Feb. 13.

“Part of the reason ( for the weakness in copper) is the Chinese data which came in weaker than expected,” said FOREX. com analyst Fawad Razaqzada. “When manufacturers are not as optimistic as before, that tends to weigh on demand expectation for metals and other commodities in general.”

But analysts said the dip in copper, used in power and construction, was most likely shortlived. “Copper is in an uptrend and the moves lower have been choppy affairs, making it seem likely that these are corrective drops, nothing more,” said Marex Spectron’s Alastair Munro.

The dollar rose to a five-week high against a basket of currencies on Wednesday after Fed Chairman Powell’s upbeat views on the US economy bolstered bets on further interest rate hikes this year.

A stronger dollar makes metals more expensive for holders of other currencies, weighing on prices.

Growth in China’s manufacturing sector in February slowed more than expected to the weakest in over one-and-a-half years as Lunar New Year holidays disrupted business activity and tougher pollution rules curtailed factory output.

China is the world’s top metals consumer and its manufacturing sector is often seen as the main bellwether for base metals demand.

Chile produced slightly less copper in January than it did in December, the government said on Wednesday.

Norwegian aluminum maker Hydro is preparing to cut output from Brazil’s Alunorte alumina refinery by 50% from March 1, as ordered by an environmental regulator.

The US Commerce department said on Tuesday it had made a final determination that imports of aluminum foil from China are being sold in the United States at less than fair value and producers are benefiting from subsidies from Beijing.

Among other industrial metals, aluminum ended 0.70% lower at $2,132 per ton.

Lead was the biggest decliner on the exchange, down 2.9% to $2,532 per ton.

Tin shed 0.90% to $ 21,530, zinc dipped 1.1% to $ 3,447.50, while nickel eased 0.30% to $13,795. —