Copper recovers from 3-week low; Fed decision in focus

Copper recovered from a more than three-week low on Wednesday amid some short-covering, even as investors expect the Federal Reserve to hike interest rates later in the day. Three-month copper on the London Metal Exchange rose 0.67% to $14,178 a metric ton by 0700 GMT, after touching $13,926 on Tuesday, its lowest in more than three weeks. The most-traded copper contract on the Shanghai Futures Exchange gained 0.76% to close at 107,740 yuan ($16,063.10) a ton. Markets were pricing in an over 90% chance of a 25-basis-point Fed rate hike, up from near 60% a week earlier, in the face of sticky inflation. Higher interest rates typically pressure economic growth, a headwind for industrial metals. The dollar hovered near a two-week high, while oil prices remained above $100 a barrel, adding to inflation concerns. Jinrui Futures, a Chinese broker, said falling treatment charges, weak smelter margins and low inventories provided support for the red metal. Signs of firmer physical demand in top consumer China also emerged. The Yangshan copper premium , a gauge of Chinese demand for imported copper, rose to $110 a ton on Tuesday, the highest since early August. Exchange inventories, however, continued to build. Copper stocks in LME-registered warehouses rose to 249,225 metric tons as of Monday, while cash copper remained at a discount to the three-month contract . U.S. COMEX copper stocks also rose for a second consecutive session, reaching 768,098 short tons, or about 696,807 metric tons, as of Monday. Copper has retreated from record highs hit last week after Reuters reported that the White House had yet to decide whether to impose tariffs on refined copper. Among other LME metals, aluminium rose 0.18%, zinc gained 0.64%, lead advanced 0.45%, nickel added 0.30% and tin climbed 0.85%. On the SHFE, aluminium rose 0.58%, zinc gained 0.69%, lead added 0.35% and tin climbed 0.99%, while nickel fell 1.64%.