METALS-Copper on track for biggest monthly decline since March 2020

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING

(Updates with official prices)

LONDON, June 30 (Reuters) – Copper on Wednesday was on track for its biggest monthly fall since March 2020 as a stronger dollar, the threat of tighter U.S. monetary policy and moves by China to keep a lid on prices pulled the metal from record highs.

Benchmark copper on the London Metal Exchange (LME) was up 0.8% at $9,405.50 a tonne in official trading but down more than 8% in June.

The metal was still up around 7% for the April-June quarter, however – the fifth consecutive quarter of rising prices – after reaching an all-time peak of $10,747.50 on May 10.

“A lot of funds have liquidated positions,” sapping momentum, said independent analyst Robin Bhar.

He said prices would be likely to rise again when the summer – traditionally a period of slow demand from industry – ends.

DEMAND: Many analysts say rising demand for copper in infrastructure and electrification will cause shortages and higher prices in the coming years.

FACTORIES: Growth in China’s factory activity dipped to a four-month low in June. Other data showed that in May, Japan’s industrial output fell by the most in a year and South Korea’s dipped from April.

DOLLAR: The dollar was heading for its biggest monthly rise since March after a hawkish shift in the U.S. Federal Reserve’s rates outlook. This hurt metals by making them more expensive for buyers with other currencies.

MARKETS: World shares were within a whisker of record highs.

CHINA: China is selling from state reserves of copper, aluminium and zinc as part of its pledge to control a surge in commodities prices.

FORECAST: Morgan Stanley forecast copper would average a little above $9,000 a tonne for the rest of the year.

LEAD SPREAD: The premium for cash lead over three-month metal on the LME surged this week to its highest since March 2020, suggesting tight supply. CMPB0-3

PRICES: Benchmark three-month lead was down 0.2% at $2,299.50 a tonne, aluminium was 0.7% lower at $2,535, zinc fell 0.1% to $2,948.50, nickel was 0.5% higher at $18,440 and tin rose 0.4% to $31,476.

All were on track for quarterly gains and all except zinc were set for monthly gains.

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