Credit: REUTERS/Juan Carlos UlateBy Pratima Desai
LONDON, Sept 20 (Reuters) - Copper prices slipped on Tuesday as rising inventories in London Metal Exchange (LME) approved warehouses and a firm dollar weighed on sentiment ahead of a decision on U.S. interest rates latr this week.
Benchmark copper CMCU3 on the LME was down 0.3% at $7,732 a tonne at 0950 GMT. Prices of the metal used widely in the power and construction industries have dropped around 30% since hitting a record $10,845 a tonne in March.
"Copper stocks are up for the second day, it could be a trend," a metal trader said, adding that the higher dollar had triggered some fund selling.
LME copper stocks MCUSTX-TOTAL have risen more than 5,000 tonnes over the past couple of days to 107,150. Cancelled warrants -- metal earmarked for delivery -- at 11% of the total are down significantly from 50% in late August.
Easing concerns about copper availability on the LME market have seen the premium for the cash over the three-month CMCU0-3 contract fall back to around $55 a tonne from last week's $125 a tonne, the highest since November last year.
The dollar against a basket of other major currencies is holding strong around two-decade highs on expectations of another aggressive interest rate hike by the U.S. Federal Reserve on Wednesday. FRX/
A higher U.S. currency makes dollar-priced commodities more expensive for holders of other currencies, which could subdue demand. This is a relationship funds use to generate buy and sell signals using numerical models.
"The market is waiting for the Fed's decision," said Dan Smith analyst at Amalgamated Metal Trading. "A 75 basis point rise is priced in, if the Fed hikes 1% copper will fall."
Some support for base metals came from an easing of COVID restrictions in top consumer China, which have hit industrial activity.
Aluminium CMAL3 was down 0.2% at $2,247 a tonne, zinc CMZN3 gained 1.4% to $3,184, lead CMPB3 added 0.3% to $1,889, tin CMSN3 fell 1.7% to $20,585 and nickel CMNI3 was little changed at $24,590.
(Reporting by Pratima Desai; editing by Kirsten Donovan)
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