London copper slips on interest rate concerns

LONDON — Copper prices drifted lower on Wednesday as speculators stepped up selling on the back of US inflation data that fuelled concerns that cuts to high interest rates would be delayed.

Three-month copper on the London Metal Exchange (LME) was down 0.7% at $8,206 a metric ton at 1700 GMT.

US Comex copper futures dipped 0.3% to $3.70 a pound.

US data on Tuesday showed consumer prices increased more than expected in January, causing traders to pare back expectations for the pace and scale of interest rate cuts.

Federal funds futures currently price in no rate cut in March and a lower than 50% chance of easing in May, according to LSEG’s rate probability app.

“It’s a macro-driven move after the biggest data release of the month, so it has a big ripple effect through all markets,” said Dan Smith, head of research at Amalgamated Metal Trading.

“There’s been a fairly decisive move recently by specs to go short and longs to liquidate in copper. In the short term it feels like there’s a lot of pressure to go a bit lower, but there’s a lot of support around $8,000.”

LME copper has shed 5.5% since touching a one-month peak of $8,704.50 on Jan. 31, pressured by worries over Chinese demand and reduced expectations of interest rate cuts.

Many analysts and investors, however, believe copper will bounce back eventually because of a tight market.

Some other metals were helped after the dollar index slipped from three-month highs. A weaker US currency makes dollar-priced metals less expensive for buyers using other currencies.

LME zinc was little changed at $2,314 a ton despite more inflows of the metal into LME warehouses, pushing up the total to 254,825 tons for its highest in 32 months.

In other metals, LME aluminum added 0.6% to $2,238 a ton; nickel gained 0.5% to $16,345; and lead climbed 1.1% to $2,019.50. Tin lost 0.6% to $27,415. —