On Wednesday, copper futures’ prices in the London Metal Exchange (LME) had eked out gains as US Dollar Index (DXY) measured against a basket of six major currencies had been hovering near its recent lows following reveal of a downbeat ADP Employment data, however, a sharp uptick in pandemic cases seemed to have pivoted the day’s Shanghai metal futures’ prices.
In point of fact, although, a global-scale shortage of raw materials alongside a caustic supply chain strain had been supporting industrial metal futures’ prices, but a latest uptick in Delta variants in the US and EU had checked the gains significantly and dampened demand outlook.
Aside from that, the US Dollar Index would likely to strengthen further following Friday’s job data despite a dovish US Fed stance, as US services sector activity had accelerated by the steepest pace ever in July, an ISM report had unveiled late in the day.
A stronger US Dollar would make it difficult for other currency holders to purchase Dollar-pegged commodities. Besides, a weaker China demand with Chinese factory outputs witnessing a sharp downturn lately, would likely to weigh on industrial metals’ prices, but a rising inflationary pressure in context of a supply constrain might offset demand-oriented complicacies, suggested analysts.
London copper gains as lockdown worries back industrial metals
Quoting statistics, in the day’s LME closure, the three-month copper in the London Metal Exchange gained 0.5 per cent to $9,589 per ton, while the most-trade September contract in the Shanghai Futures Exchange ended 1.1 per cent lower to 70,120 yuan per ton ($10,855.67) amid a dismal demand outlook.
Among other industrial metals, London Aluminium futures added 0.4 per cent to $2,595 per ton and nickel futures ended 0.1 per cent lower to $19,375 a ton, while London zinc contracts rose 0.3 per cent to $2,977.50 per ton, however, zinc futures in mainland Shanghai had wrapped up the day 1.3 per cent lower to 22,050 yuan per ton, underscoring an intensifying turmoil in Chinese factory activity.
Meanwhile, addressing to an uncertain commodity market outlook, a director at UK broker Kingdom Futures, Malcolm Freeman said, “If this continues, Chinese industrial activity is bound to be affected once again. It looks like we will have to endure markets that are behaving like rudderless ships for a while longer. ”