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Correct: Metals: Copper Down on Profit-Taking, Looser Supply

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01/03/2018 | 01:05pm CEST

(The price of copper slipped Wednesday amid investor profit-taking. "Metals: Copper Down on Profit-Taking, Looser Supply," at 1114 GMT, misstated that copper hit a three-month high on Tuesday in the first paragraph. It didn't. The correct version follows:)

By David Hodari

The price of copper slipped Wednesday amid investor profit-taking.

The base metal was last 0.7% lower at $7,167.50 a metric ton in midmorning trade in London.

Gold was also lower, falling 0.2% to $1,314.92 a troy ounce, with the dollar edging higher after a dismal few weeks.

The WSJ Dollar Index--which measures the U.S. currency against a basket of 16 others--was last 0.05% higher, although still 1.1% down on-the-week. A weaker dollar tends to make dollar-denominated commodities cheaper for holders of other currencies.

Copper's fall came after a month of strong gains, with prices still up 5.2% on-the-month. "The rebound from mid-December to the end of the year was quite remarkable. Outside of the weaker U.S. dollar there aren't many solid reasons behind it," said Carsten Menke, commodity analyst at Julius Baer.

A report that China's largest producer, Jiangxi Copper Co., had been ordered to halt output for a week had been one of the factors boosting prices, although prices did not weaken after Jiangxi denied the rumor, Mr. Menke added.

Lower copper prices come in a broader context of growing supply. "It appears that China has aggressive plans for smelting capacity expansion this year. That, plus Tongling's deal with Freeport for lower treatment charges than last year..." were driving copper selling, Mr. Menke said.

Number one Chinese copper smelter Tongling Nonferrous Metals Group and Freeport-McMoRan agreed to a treatment and refining charge (TC/RCs) 2018 price of $82.25 a ton last week, Reuters reported. TC/RCs are a factor in the cost of refined copper production.

Looser supply out of South America also dragged on prices. Chile's National Statistics Institute reported late last year that the country's copper production rose 4.8% year-on-year in November, Commerzbank analysts said in a note.

A renovated concentrator plant at Escondida--the world's largest mine--was a factor in that rise, Commerzbank said, adding that Chilean copper commission Cochilco has also said that new capacity at Escondida would see production continue to grow.

Among base metals, zinc was down 0.54% at $3,332.50 a metric ton, aluminum fell 0.53% to $2,252.50 a metric ton, tin rose 0.08% to $19,850 a metric ton, nickel fell 0.47% to $12,595 a metric ton and lead rose 0.20% to $2,563 a metric ton. Among precious metals, silver was down 0.41% at $17.12 a troy ounce, palladium fell 0.98% to $1,085.10 a troy ounce and platinum rose 0.05% to $945 a troy ounce.

Write to David Hodari at [email protected]

Stocks mentioned in the article
ChangeLast1st jan.
LME COPPER CASH -0.15% 6173 End-of-day quote.-14.04%
US DOLLAR INDEX -0.06% 94.752 End-of-day quote.3.15%
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