Base metals weighed down by strong dollar, demand concerns

Base metals trended down on Monday as pressure from a strong U.S. dollar and subdued demand outlook outweighed supply risks.

Three-month copper on the London Metal Exchange lost 0.3% to $8,457.50 per metric ton by 0810 GMT, having shed 0.7% in the previous week.

The dollar index hit an eight-week high against its major peers on Monday, weighing down metals as it made purchases more expensive for non-dollar buyers.

The strength came with fading expectations of aggressive rate cuts by the Federal Reserve this year after the U.S. central bank's remark and strong data showing its economic resilience last week.

Spot trade in top consumer China slowed down recently as market participants gradually started the Lunar New Year holiday, which will officially kick off on Saturday.

That translated into rising inventories. SHFE on-warrant copper stocks <CU-STX-SGH> rose for a sixth straight week to 68,777 tons, more than double from late December.

The most-traded March copper contract on the Shanghai Futures Exchange slid 0.4% to 68,540 yuan ($9,522.49) per ton.

Base metals are in for a subdued 2024 with weak demand damping any bullish supply pressures, the latest Reuters poll of analysts showed.

However, the copper market was underpinned by raw material supply disruption.

Treatment charges for smelters to process copper concentrate fell further to $22.08 last Friday, a multi-year low, an index by the Shanghai Metals Market showed.

LME zinc shed 0.4% to $2,441.50 a ton, lead dropped 0.4% to $2,136.50, tin declined 1.9% to $25,075, aluminium dipped 0.2% to $2,229, and nickel lost 0.5% to $16,160.

SHFE aluminium declined 0.4% to 18,815 yuan a ton, nickel fell 1.4% to 124,860 yuan, zinc dropped 1.1% to 20,535 yuan, tin was down 2.3% to 210,310 yuan, while lead was listless at 16,205 yuan.