Copper slips as greenback’s surge prompts profit taking

LONDON — Copper prices slipped on Tuesday due to a rise in the dollar and as investors locked in gains after a rally to above $6,000 a ton, driven by the prospect of major supply disruptions in Chile and Indonesia.

The dollar was on course for its steepest gain against the euro in more than a month following hawkish comments from Federal Reserve officials, while European political uncertainty also boosted the greenback.

A stronger dollar erodes the buying power for those paying for dollar- denominated commodities with other currencies.

Three- month copper on the London Metal Exchange (LME) slipped 0.20% to close at $6,060 a ton, after rising 1.90% on Monday. Copper hit its highest level in one-and-a-half years earlier this month on the prospect of disrupted supply.

“The market has priced in a lot of the disruptions and is vulnerable to corrections. All these ( supply) events have attracted speculative interest and as soon as they die down so will that interest,” said Warren Patterson, commodities strategist at ING.

In Chile a government- mediated meeting between BHP Billiton, and striking workers at its Escondida copper mine has failed without any future talks planned.

Meanwhile US mining giant Freeport-McMoRan has warned it could take the Indonesian government to arbitration and seek damages over a contractual dispute that has halted operations at the world’s second-biggest copper mine.

In demand-side news, China’s central bank said on Tuesday it would extend a preferential scheme for some banks that would free up additional funds for lending, as long as the banks channel money to weaker sectors of the economy. China accounts for nearly half of global copper demand.

Aluminum ended down 0.70% at $1,886. There are supply concerns in aluminum, where a major producer offered a $125 per ton premium to Japanese buyers for April-June shipments, up 32% from the last quarter.

Still, aluminium is at risk of a correction lower, JP Morgan said in a note. “Chinese inventories of aluminum look set to continue to increase over the coming weeks.”

Nickel closed down 2.70% at $ 10,855, having hit its highest since Dec. 19 on Monday amid a mining crackdown in the Philippines.

Among other industrial metals, zinc ended down 0.30% at $ 2,875, lead ended down 2% at $ 2,265, while tin closed down 0.50% at $19,800. —