Nervous market keeps copper stable ahead of Fed rate decision
LONDON (May 3) Copper prices in London were stable on Wednesday as investors awaited the U.S. Federal Reserve's decision on interest rates while balancing rising inventories with expectations of a tight market in the longer term.
Three-month copper CMCU3 on the London Metal Exchange (LME) was unchanged at $8,513 a tonne by 0958 GMT, having touched a one-week high of $8,770.15 on Tuesday.
"The market has been caught up in the general nervousness regarding the global economic outlook, the regional U.S. banking crisis and question marks regarding how (Fed Chair Jerome) Powell will manage today's FOMC message," Saxo Bank strategist Ole Hansen said, referring to the central bank's Federal Open Market Committee.
The U.S. Federal Reserve is expected to raise interest rates on Wednesday and perhaps signal a pause in its 14-month tightening cycle.
On-warrant copper stocks in LME-registered warehouses rose by 950 tonnes to 65,875 tonnes to their highest in nearly four months. MCUSTX-TOTAL
On the technical front, however, copper held well above the 200-day moving average of $8,325 a tonne.
The market is in the midst of a battle between short-term tech and demand-focused selling versus strong long-term supply-driven support, Saxo Bank's Hansen said.
Commodity markets were under pressure on Wednesday from concern over demand destruction from tighter monetary policy, said WisdomTree analyst Nitesh Shah, with oil prices LCOc1 plunging by 2.7%.
The copper market, however, remains tight in the long term, he added. The market is expected to be in deficit this year owing to improved Chinese demand, the International Copper Study Group said last week. It previously expected a surplus.
In other metals, aluminium CMAL3 slipped 0.8% to $2,347.5 a tonne, zinc CMZN3 rose 0.6% to $2,626, lead CMPB3 fell 1% to $2,151 and tin CMSN3 was up 0.6% at $26,660.
Nickel CMNI3 rose 0.2% at $25,010 after touching its two-week high of $25,420. The discount for the LME's cash contract against three-month nickel MNI0-3 had moved to $15.50 a tonne at Tuesday's close, compared with $8.50 a tonne on Friday, its widest in more than a year.
Reuters
