Copper falls as stronger dollar outweighs fresh supply woes

Copper slipped on Tuesday, as a firmer dollar and concerns about global economic growth outweighed fresh supply worries triggered by heavy stock withdrawal requests on the London Metal Exchange. Benchmark three-month copper on the London Metal Exchange was down 0.18% at $14,247.5 a metric ton by 0701 GMT. The most-traded copper contract on the Shanghai Futures Exchange edged 0.21% higher to 107,980 yuan ($16,060.80) a ton. The red metal, along with other industrial metals, was weighed down by a stronger dollar, worries about interest rates and cautious economic sentiment. It marks a reversal after Monday's gains from a big increase in LME copper warrant cancellations — meaning metal marked for warehouse withdrawal — which "stoked fresh concerns of supply shortages," Daniel Hynes, senior commodity strategist at ANZ, said. The dollar index was up 0.13%. A stronger dollar makes greenback-denominated commodities more expensive for buyers using other currencies. Tariff worries and an apparent impasse in talks to end the Middle East war have raised fears about U.S. interest rates remaining higher for longer. Traders were pricing in a 42% chance of a rate hike at the Federal Reserve's September meeting, from 36% a week earlier, according to the CME's FedWatch tool. Higher interest rates can weigh on growth-dependent industrial materials such as copper, which is used in power and construction, by dampening economic activity. The dour conditions also helped aluminium shrug off news that the derailment of a train operated by Russian aluminium producer Rusal in Guinea had suspended exports from a 600,000-ton-per-year alumina refinery there. The light metal fell 0.54% on the LME and eased 0.13% on the SHFE. Among other LME metals, zinc ticked 0.05% higher, lead added 0.16%, nickel lost 0.48% and tin dipped 0.08%. On the SHFE, zinc added 0.44%, lead dipped 0.15%, nickel lost 0.8% and tin lost 0.4%.