Copper retreats on frail Chinese factory data and firmer dollar

LONDON — Copper prices retreated on Tuesday after factory data weakened in leading metals consumer China and as reduced expectations of US interest rate cuts strengthened the dollar.

Three-month copper on the London Metal Exchange (LME) was down 1.3% at $9,455.50 per metric ton by 1630 GMT.

A robust rally in copper fuelled a nearly 20% surge in LME prices during the two months to Monday, when it touched $9,640.50 a ton for the highest level since June 2022.

Data on Tuesday showed Chinese industrial output grew 4.5% year on year in March, slowing from the 7% pace of JanuaryFebruary and well below analyst expectations of 6%.

March retail sales were also softer than expected despite the overall economy growing faster than forecast in the first quarter.

“Today it’s the economic outlook from China that seems to be troubling the market,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Some speculators were likely to have been liquidating bullish positions, he added.

“Any weakness in the short term will leave the market exposed to long liquidation because some of these recently established longs will be quite trigger happy.”

The dollar hit a five-month high after hotter than expected US retail sales figures raised questions about when the US Federal Reserve could begin cutting interest rates.

“As funding costs are not going to come down at the rate that the market was looking for, it could dissuade some restocking people were counting on,” Mr. Hansen said.

A stronger dollar makes metals priced in the currency more expensive to buyers using other currencies.

LME aluminum was little changed at $2,554.50 a ton, having retreated from 22-month highs touched on Monday after the US and Britain banned the LME and CME from accepting newly produced Russian aluminum.

LME data on Tuesday showed that investors gave notification they wanted to remove nearly 80,000 tons of aluminum, about a quarter of total available stocks, from LME-registered warehouses in Gwangyang, South Korea, which traders say is a popular location to store Russian material.

LME nickel, which had also rallied on the sanctions, slipped 0.5% to $17,660 a ton while zinc dropped 0.5% to $2,761; lead fell 1.9% to $2,144; and tin eased 1.5% to $31,740. —