BEIJING — Prices of base metals rose on Wednesday, supported by a weaker dollar and concerns over supply crunch in the physical market, although cautious sentiment prevailed ahead of a key U.S. Federal Reserve rate decision.
Three-month copper on the London Metal Exchange was up 0.8% at $7,713 a tonne, as of 0427 GMT, while the most-traded December copper contract on the Shanghai Futures Exchange rose 1.7% to 63,750 yuan ($8,766.26) a tonne.
The world’s biggest central bank is due to release its policy statement at 1800 GMT, where a 75-basis-points (bps) hike is widely anticipated by the market.
While recent weak U.S. economic data raised some hopes on a lesser degree hike in December, as reflected by a weaker dollar.
The U.S. dollar slipped from near a one-week peak versus major peers on Wednesday.
A weaker dollar makes it cheaper for other currency holders to buy the greenback-priced commodity.
Tight inventories and fresh production disruptions in the physical markets also garnered some support to prices.
Copper inventories on exchanges are currently at only about two days of supply, ANZ Research said in a note.
September saw copper output in Chile, the world’s largest producer of the metal, fall 2.6% on a year-on-year basis to 439,277 tonnes, according to the country’s statistics agency INE.
Meanwhile, industrial production in China has also been affected by power supply and COVID-restrictions, amid subdued demand.
An aluminum producer in central China’s Henan province told Reuters they has cut production by 10% since mid-October due to COVID-related logistics hurdles and the sluggish market conditions.
SHFE aluminum gained 0.7% to 17,845 yuan a tonne, tin rose 2.5% to 161,210 yuan a tonne, while zinc was up 2.6% to 22,960 yuan a tonne.
LME aluminum rose 0.7% to $2,258.50 a tonne, tin increased 1.5% to $18,240 a tonne and zinc nudged 1% higher to $2,771 a tonne.
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($1 = 7.2722 Chinese yuan) (Reporting by Siyi Liu and Dominique Patton in Beijing, additional reporting by Zhuo Gao in Hong Kong; Editing by Rashmi Aich and Sherry Jacob-Phillips)