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Copper price edges higher as markets eye signs of US rate hike

By Fitri Wulandari

05:57, 15 December 2021

A worker watches copper smelting at a smelter
– Photo: Shutterstock

Copper price ticked higher on Wednesday supported by demand as investors wait for clues from the Federal Reserve’s meeting today on when the US central bank will begin to hike interest.

The benchmark copper futures rose 0.14% to $9,425 per tonne. The price of the metal, the indicator of the health of economy, slipped from its highest price since May at $10,652/tonne hit on 19 October on concerns about global economic growth. 

“Copper prices held up amid signs of strong demand,” analysts at ANZ Research wrote.

Strong demand

US buyers of Chilean state-owned copper miner Codelco have agreed to a hike in the premium they pay for copper cathode next year, according ANZ Research without giving details.

The demand in China, the world’s top consumer may rebound, after Beijing recently pledged to implement prudent monetary policy and proactive fiscal policies to stabilise the economy and support growth to a reasonable range in 2022, economic data provider Trading Economics said.

However, price gain is limited as investors are keeping close watch on the Federal Open Market Meeting today for signs of rate hike from the US central bank.

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US rate hike

“Although the market is expecting an accelerated asset tapering and interest rate hike by the US Fed (Federal Reserve) amid growing inflationary pressures, improving liquidity at the end of the year may underpin copper prices,” Shanghai Metal Market (SMM) said in a note on Wednesday.

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On supply side, authorities closed key ports in north China to prevent the spread of Covid-19. The port closure disrupted copper concentrate supply to smelters in northwest China, affecting their output, according to SMM.

However, rising domestic production as smelters stepped up output after the power rationing in China ended, may provide downside risks for copper price.

Base metals down

“The domestic copper inventory is likely to stop falling and begin to grow, putting downward pressure on copper prices,” SMM added.

Prices of other base metals were mixed. Apart from copper, tin also traded 0.52% higher at $38,802.5/tonne. 

Zinc fell 1.29% at $3,262.25/tonne; aluminium price fell 0.47% to $2,616.25/tonne, and lead dropped 0.70% to $2,268.50/tonne. Nickel was down 0.23% at $19,440.00/tonne.

Read more: Copper price forecast: Will it surpass its all-time high?

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