Copper prices held steady on Wednesday as the market waited for loans data from top consumer China and U.S. inflation numbers that could determine the direction of U.S. interest rates.

Benchmark copper HG1! on the London Metal Exchange was up 0.10% at $9,925 a metric ton at 0915 GMT.

Traders said volumes were light as producers and consumers were absent from the market and that activity was mostly dominated by funds which react to macro factors.

China’s loans data is due September 10-15. The main focus will be the total social financing numbers used by analysts as a gauge of industrial metals demand, expected to have risen in August from July.

On U.S. interest rates, financial markets are pricing in a quarter-point cut from the Federal Reserve next week, with a small chance of a half-point cut. This week’s report on U.S. consumer inflation on Thursday could influence the prospect of a larger cut.

Lower Fed rates would typically weigh on the U.S. dollar which when it falls makes dollar-priced metals cheaper for holders of other currencies which could boost demand.

“(The dollar’s) weakness, at least early in September, will likely provide an element of support,” said Marex analyst Ed Meir. “But should the Fed catch markets off guard, a stronger dollar could usher in a price setback going into the second half of the month.”

Supporting copper was a supply disruption in Indonesia where mining at Freeport-McMoRan’s FCX Grasberg operation, one of the world’s largest copper mines, has been temporarily halted.

Focus is also on zinc stocks (MZNSTX-TOTAL) in LME registered warehouses, which at 50,825 tons have dropped nearly 300% since the middle of April. Cancelled warrants or zinc earmarked for delivery indicate another 15,375 tons are due to leave the LME system.

Worries about the availability of zinc on the LME market have created a premium, or backwardation, with the cash contract over the three-month forward (CMZN0-3) currently trading around $18 a ton.

Three-month zinc ZNC1! was up 0.4% at $2,867 a ton, aluminium ALI1! slipped 0.1% to $2,620, lead LEAD1! eased 0.1% to $1,976, tin FTIN1! rose 0.8% to $34,280 and nickel NICKEL1! was a touch softer at $15,095.
Source: Reuters