Dollar Strength Causes Copper To Decline

On Monday, copper prices in London fell to their lowest level in nearly four weeks as a strong dollar made commodities priced in greenbacks more expensive for holders of other currencies.

The three-month copper contract on the London Metal Exchange was down 0.5% to $8,935.50 per ton. It dropped to $8,904.50 earlier in the session, its lowest level since January 10.

On course to lose money for a third straight day, the most actively traded March copper contract on the Shanghai Futures Exchange closed down 0.8% at 68,340 yuan ($10,077.12) per ton.

Questions over China’s rate of recovery following the removal of its harsh COVID restrictions are also putting pressure on metal prices. For most of January, bets expecting a significant increase in Chinese demand drove up metal prices.

Copper prices were about to decline more drastically, but the possibility of supply disruptions stopped that. Due to a strong dollar making commodities priced in greenbacks more expensive to holders of foreign currencies, copper prices fell on Monday.

Future of copper and other metals

Despite Peruvian demonstrations that forced other businesses to suspend operations, Southern Copper said Friday that its mines are operating at full capacity and that its Q4 production increased slightly from Q3 levels.

The firms $2.82 billion net sales for Q4 were in line with the same period last year; sales volumes rose by 2.1% for copper, 6.4% for silver, and 38.2% for zinc, but declined by 15.7% for molybdenum.

Adjusted EBITDA for Q4 decreased from $1.72 billion a year ago to over $1.65 billion. In contrast to the 1.6% quarterly increase in Q4 copper production, mined silver production increased by 9.6%; molybdenum plummeted by 15.6%, and zinc fell by 7.4%.

Aluminum on the LME fell by 0.4% to $2,560 per ton, tin by 2.8% to $27,580 per ton, zinc by 1.1% to $3,204.50 per ton, and lead by 1.2% to $2,124.50 per ton.

Meanwhile, on the SHFE, Nickel sank 4.7% to 211,110 yuan per ton; tin dropped 5.2% to 217,800 yuan per ton; zinc lost 3.4% to 23,360 yuan per ton, and lead eased 0.3% to 15,270 yuan per ton.

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