Firm dollar, worries about demand in China weigh on copper

Copper prices pulled back on Wednesday, extending their fall to a fifth consecutive session, under pressure from a strong dollar, worries about demand in top metals consumer China and easing supply concerns.

Benchmark copper on the London Metal Exchange was down 0.2% at $10,639.5 a metric ton in official open-outcry trading.

The metal, used in power and construction, has lost 5% since worries about tighter global supply pushed it to a record high of $11,200 a week ago. This correction drove the metal below the 21-day moving average, which became the level of resistance at around $10,780.

"The pullback in copper appears to reflect a healthy consolidation, with some excess momentum being unwound from the market, potentially offering some room for a modest rebound once positioning stabilises," analysts at Sucden Financial said.

TIGHT RANGE AHEAD

Copper, heading for the largest yearly gain since 2021 with its 22% growth so far this year, is likely to trade in a $10,000 to $11,000 range in the near-term as macroeconomic drivers and last week's weak official Chinese manufacturing PMI data weigh, said Standard Chartered analyst Sudakshina Unnikrishnan.

More clues about China's economy will be coming from Friday's trade data release and next week's credit lending as well as activity indicators.

On Wednesday, the Chinese yuan eased to a two-week low against the U.S. currency, making dollar-priced metals more expensive for the Chinese buyers.

In other LME metals, aluminium fell 0.5% to $2,846 a ton in official activity, zinc lost 0.8% to $3,063, lead rose 0.3% to $2,028.5, while tin slid 0.7% to $35,550.

Nickel eased 0.4% to $15,020 after hitting $15,015, its lowest since August 22. The metal is down 2% so far in 2025, heading for the third straight year of price decline, as rising production in Indonesia keeps the market oversupplied.

Almost 27% of global nickel supply is operating below cash cost at nickel prices of around $15,000 a ton, analysts at Benchmark Mineral Intelligence said in a note.