Copper prices fall as Iran's peace hopes fade and U.S. inflation figures are due
Copper prices slid from their three-month highs on Tuesday, as crude oil prices rose and Middle East peace hopes faded?after Trump rejected Iran's proposal.
Economists?expect to see the biggest annual increase in U.S. Inflation in the past two-and-ahalf years. This would dampen the hopes of the Federal Reserve cutting interest rates.
The benchmark three-month price of copper on the London Metal Exchange fell 0.41% at 0725 GMT to $13,894 per metric ton, after reaching a high of over $3 months earlier in the day.
The Shanghai Futures Exchange's most active copper contract closed the day 2.10% higher at 105.510 yuan (15,528.28 dollars) per ton. This was a reduction of gains made earlier that morning, when the contract reached a high of 108.400 yuan - a three-month-high.
As hopes of a Middle East Peace Deal faded, oil prices rose. This kept?concerns about energy supply and inflation alive. Brent crude sustained at $105 per barrel.
The traders will also be watching the U.S. consumer inflation data that is due on Tuesday. The CPI is expected to rise 3.7% in the 12 months up until April. This would be the biggest annual increase since September 20,23. It could also reinforce expectations that Federal Reserve will continue to hold interest rates at the same level for a longer period.
Copper's Shanghai rally, however, showed that investors were still focused on the supply risks. Traders cited lingering concerns over concentration tightness, though Freeport McMoRan pushed against reports of a new delay at its Grasberg mining in Indonesia.
The traders also pointed to Peru as the third largest copper producer in the world, where the government has authorized state-run Petroperu to seek $2 billion in state-backed loan to sustain its operations. This, they said, raised concerns that fuel supply stress could affect the mine logistics in the country.
Prices were also supported by expectations that China's refined imports of copper would increase in the second quarter, citing a firm demand as well as slower production at home due to smelter repairs.
Nickel fell 1.63%, while tin tumbled 1.32%.
The SHFE also saw a rise in tin, 0.27%, and a fall in lead, 0.69%. $1 = 6.7947 Chinese Yuan Renminbi (Reporting and editing by Janane Vekatraman, Ronojoy Mazumdar and Lewis Jackson)
(source: Reuters)
