Cop­per edges higher ahead of Fed meet­ing

The Financial Daily - - INTERNATIONAL -

LON­DON: Cop­per rose on Wed­nes­day, re­bound­ing fur­ther from 5-1/2-year lows as the dol­lar eased off highs and traders took the op­por­tu­nity to buy at still low prices be­fore the Fed­eral Re­serve's meet­ing ends.

Three-month cop­per on the Lon­don Metal Ex­change (LME) traded at $5,455 a tonne, up 0.6 per cent, to re­cover from a 3 per cent drop in the pre­vi­ous ses­sion.

Cop­per is still down 13 per cent so far this month, ex­tend­ing a 20 per cent loss reg­is­tered over 2013 and 2014. It hit a 51/2-year low of $5,339.50 a tonne on Mon­day.

The US cen­tral bank is ex­pected to sig­nal it re­mains on track to be­gin rais­ing in­ter­est rates later this year.

Fed pol­i­cy­mak­ers will likely re­state their "pa­tient" ap­proach to rais­ing rates, while also voic­ing faith that the econ­omy will con­tinue to pick up.

The dol­lar was steady, eas­ing off ear­lier highs, be­fore the Fed state­ment. Aweak dol­lar makes com­modi­ties priced in the cur­rency cheaper for hold­ers of other cur­ren­cies.

"If the Fed does em­pha­sise the word "pa­tience" then it could take some more wind out of the dol­lar rally which is a pos­i­tive sign for cop­per," said Naeem As­lam, chief mar­ket an­a­lyst at Ava Trade.

"(How­ever)... we do be­lieve that today's event may have no fire­crack­ers and per­haps cop­per will con­tinue its trend to­wards the down­side as sup­ply dom­i­nates over de­mand."

High­light­ing high lev­els of sup­plies, cop­per stocks in LME ware­houses rose by 6,450 tonnes to 244,675 tonnes, their high­est level in more than nine months.

The global cop­per mar­ket over­sup­ply is ex­pected to shrink this year and next, help­ing cush­ion prices that have suf­fered due to slow­ing growth in top con­sumer China, a Reuters poll showed.

Global min­ing com­pany An­glo Amer­i­can said a sharp drop in com­mod­ity prices will likely re­sult in im­pair­ment charges for its 2014 fi­nan­cial year, as it posted an­nual pro­duc­tion ahead of its guid­ance for its key com­modi­ties.

Pol­ish cop­per pro­ducer KGHM, faced with a strike at its Chilean mine, Sierra Gorda, said it had con­tin­gency plans to main­tain low-level pro­duc­tion if the dis­pute was not re­solved.

In other met­als, zinc traded up 0.8 per cent at $2,121 a tonne, par­tially claw­ing back losses from the ses­sion be­fore, helped by a pos­i­tive price dif­fer­en­tial for Chi­nese buy­ers.

Lead traded al­most flat at $1,870, tin was up 0.8 per cent at $19,450, nickel traded 1.5 per cent higher at $15,020 and alu­minium traded 0.1 per cent higher at $1,857.50. -Reuters

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