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METALS-Shanghai base metals fall on U.S. rate hike jitters

METALS-Shanghai base metals fall on U.S. rate hike jitters

Reuters · 09/14/2022 01:36
METALS-Shanghai base metals fall on U.S. rate hike jitters

Adds comments, updates prices

By Siyi Liu and Dominique Patton

- Prices of base metals in Shanghai fell on Wednesday as fears of more aggressive rate hikes by the U.S. Federal Reserve outweighed support from supply challenges due to tightening inventories.

The most-traded October copper contract on the Shanghai Futures Exchange SCFcv1 fell 1.3% to 62,320 yuan ($8,956.34) a tonne by 0514 GMT, while three-month copper on the London Metal Exchange CMCU3 slid 0.6% to $7,825.50 a tonne, extending losses from the previous session.

U.S. consumer prices unexpectedly jumped in August to an annual pace of 8.3%, far from the four-decade peak reached in June.

The hotter-than-expected consumer price index (CPI) reading fuelled bets that the Fed's would certainly hike interest rates later this month, which could slow down global economy and dampen metals' demand.

Subsequently on Tuesday, dollar posted its biggest daily percentage gain since 2020.

A firm dollar pressures commodities priced in the greenback by making them more expensive for holders of other currencies.

ShFE SNIcv1 lost 1.4% to 189,480 yuan a tonne, tin SSNcv1 shed 4.8% to 173,210 yuan a tonne, aluminium SAFcv1 was down 0.8% to 18,640 yuan a tonne, and zinc SZNcv1 dipped 0.1% to 24,775 yuan a tonne.

This was despite the persistently low inventories and supply interruption in China.

The southwestern Yunnan province recently ordered aluminium producers to cut their power consumption by 10%.

ShFE warehouse aluminium stocks stood at 79,745 tonnes on Friday, after dropping three consecutive weeks by 22.9% from 103,413 on Aug.19. SAF-TOTAL-W

"Low stocks are the only supporting factor in the market, but macro weakness is holding us back from taking a long position," an aluminium trader said.

LME tin CMSN3 dropped 1.6% to $21,045 a tonne, lead CMPB3 declined 0.8% to $1,936.50 a tonne, while zinc CMZN3 was up 0.4% to $3,239 a tonne.


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($1 = 6.9582 Chinese yuan)


(Reporting by Siyi Liu and Dominique Patton; Editing by Subhranshu Sahu and Uttaresh.V)

((Siyi.Liu@thomsonreuters.com;))

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