Copper down on firmer dollar, slowdown; lead hits 3-month low

  • Benchmark lead, the worst performer so far this year on the LME, slipped to the lowest since Jan 8 at $1,945.50 a tonne before paring losses to $1951, a 0.1% dip
  • LME copper slipped 0.3% to $6,446.50

London: Copper slipped on Thursday on a stronger dollar and worries about a global slowdown while lead touched a three-month low on concerns that weak auto sales would dampen car battery demand.

Copper fell along with other risky assets including shares after the European Central Bank on Wednesday highlighted threats to global growth and US President Donald Trump threatened new tariffs on imports from the European Union.

Adding to pressure on metals, the dollar index climbed on Thursday after US producer prices posted the biggest rise in five months and weekly jobless claims fell to the lowest since 1969. A firmer dollar makes metals more expensive to buyers using other currencies.

Losses in the industrial metals market, however, were cushioned from data showing factory gate inflation in top metals consumer China picked up for the first time in nine months in March.

"Trading recently has been choppy. It's pretty hard to have a view with conviction because there's still a lot of uncertainty surrounding not only the trade war and the deal we may have, but also global growth," said Geordie Wilkes, head of research at Sucden Financial in London.

"We've seen some poor automobile numbers over the past few months that could be part of the issue with the lead market at the moment on a consumer demand basis."

Some 80% of lead demand goes to production of batteries, the bulk of them for vehicles.

Benchmark lead, the worst performer so far this year on the London Metal Exchange, slipped on Thursday to the lowest since January 8 at $1,945.50 a tonne before paring losses to $1,951 by 1400 GMT, a 0.1% dip.

LME copper slipped 0.3% to $6,446.50.

Zinc spread: The premium of cash zinc over the three-month contract rose to $74.50 a tonne, close to the $76.75 level touched two weeks ago, the highest since early January and indicating tight supply.

Refined zinc has been hit by shortages in LME warehouses, but many analysts expect the tightness to be eased in coming months as rising mine output flows through to refined material.

Large zinc position: Exacerbating the tight conditions, one participant was holding more than half of available LME zinc inventories and short-term futures positions, LME data showed.

Three month zinc, which has gained 18% this year, was only LME metal in positive territory on Thursday, rising 0.9% to $2,897.50 a tonne.

Nickel shortage: Investors appeared to brush off forecasts by analysts at a conference in Shanghai that the global nickel market and its key growth sector, electric vehicle batteries, may face grave supply shortages unless Indonesian projects ramp up quickly. LME nickel slumped 1.9% to $12,980.

US-China trade: The United States and China have largely agreed on a mechanism to police any trade agreement they reach, including establishing new "enforcement offices," US Treasury Secretary Steven Mnuchin said.

Prices: LME aluminium dipped 0.1% to $1,861 a tonne while tin eased 0.5% to $20,740.

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