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Copper prices in London showed a slight improvement on Friday, but the red metal is on track for its fifth consecutive weekly loss. The strength of the US dollar, which is near a two-month high, coupled with expectations of further interest rate hikes and positive US debt-ceiling discussions, has influenced traders’ sentiment.

As of 0715 GMT, the price of three-month copper on the London Metal Exchange (LME) increased by 0.8% to reach $8,236 per tonne. However, this marks the longest streak of weekly declines in approximately a year. Meanwhile, the most-traded copper contract on the Shanghai Futures Exchange experienced a modest gain of 0.1% to reach 65,690 yuan ($9,503.62) per tonne.

Chinese Services-Led Recovery Adds to Copper Market Pressure

The recent release of Chinese economic data has dampened investor confidence, particularly in the world’s largest consumer of metals. This decline in confidence has contributed to the downward pressure on copper prices. Industrial metal, often seen as an indicator of economic health, has fallen by nearly 15% from its peak in January.

Sabrin Chowdhury, head of commodities at BMI, attributes the limited growth in copper. Besides metals, other commodity prices may weaken Chinese demand. Especially considering the strength of the US dollar driven by robust economic data and hawkish comments from the Federal Reserve.

Chowdhury also emphasizes that the outlook for industrial metals in 2023 remains weak, with the recovery in China being driven mainly by the services sector rather than traditional drivers such as manufacturing and construction.

Refined Zinc Prices Hit Lowest Point Since October 2020; Outlook Remains Bearish

The US dollar remains strong, reaching its highest level since March 20, as hopes rise for a resolution on the debt ceiling between US President Joe Biden and House Speaker Kevin McCarthy.

A robust dollar typically reduces demand for commodities priced in the US currency. Furthermore, Federal Reserve policymakers have indicated that inflation has not cooled sufficiently to warrant pausing interest rate hikes.

Among other metals, LME aluminum recorded a 0.2% increase to $2,289 per tonne, while nickel surged by 1.5% to $21,235. Zinc registered a gain of 0.9% to $2,480.50, and tin climbed by 0.8% to $25,215. Lead also experienced a 0.5% increase, reaching $2,064.

Looking specifically at refined zinc, experts predict a downward trend until 2025 due to weak demand growth and a significant increase in production. As a result, prices for refined zinc have reached their lowest level since October 2020.

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