LONDON — Copper prices steadied on Friday as the positive impact of a weaker dollar on industrial metals consumption offset worries about demand in top consumer China.
Funds cutting short positions — bets on lower prices — also helped support copper, traders said.
Benchmark copper on the London Metal Exchange (LME) was little changed at $7,817 a tonne at 1515 GMT and on course for a fifth consecutive weekly loss. Prices of the metal used in the power and construction industries have dropped nearly 30% from a record high of $10,845 in March.
“One negative weighing on sentiment is that isolated lockdowns continue in China. The government has yet to stamp out COVID despite its best efforts to do so,” said Edward Meir, analyst at ED&F Man Capital Markets.
“Still, it is important to note that the authorities are refraining from city-wide lockdowns in major metropolises like Shanghai and are instead pinpointing their efforts to specific areas or buildings.”
DOLLAR: A lower U.S. currency makes dollar-denominated metals cheaper for holders of other currencies, which would subdue demand. This relationship is used by funds to generate buy and sell signals.
INTEREST RATES: Soaring inflation in the United States and Europe has prompted central banks to raise interest rates, with further increases forecast. This has led to economic slowdown, prompting some analysts to talk of potential recession.
Strong U.S. payroll data on Friday gave the Federal Reserve ammunition to deliver another 75 basis point interest rate increase later this month.
INVENTORIES: Zinc stocks
Worries over supplies on the LME market have helped the cash zinc
Three-month zinc was down 0.8% at $3,084 a tonne.
OTHER METALS: Aluminium fell 0.4% to $2,433, lead ceded 2.7% to $1,917, tin slid 2.2% to $25,400 and nickel gained 0.8% to $21,715.
(Reporting by Pratima Desai Editing by David Goodman and Krishna Chandra Eluri)