Copper slipped on Tuesday as lack of buying interest in leading consumer China prompted profit-taking after prices rallied to 15-month highs the previous day while a lower dollar helped limit losses, traders said.

Benchmark copper HG1! on the London Metal Exchange was down 0.5% at $10,134 a metric ton at 1105 GMT. On Monday, it touched $10,192.50 a ton for the highest since June last year.

Copper’s rapid climb through the $10,000 a ton psychological level this month has sidelined Chinese buyers, traders said

Financial and commodity markets are waiting for a decision on U.S. interest rates from the Federal Reserve which meets Tuesday and Wednesday. Expectations of a cut have weighed on the U.S. currency which when it falls makes dollar-priced metals cheaper for holder of other currencies and could boost demand.

“Given a high degree of market consensus surrounding the probability of a rate cut, it is likely that investor and trader positioning has been taking place well in advance, which will blunt the immediate effect of any such mechanisms,” Benchmark Mineral Intelligence analysts said in a note.

Traders said funds were squaring their bets on higher copper prices ahead of the Fed decision and that a pick-up in copper stored in warehouses monitored by the Shanghai Futures Exchange (CU-STX-SGH) had reinforced concerns about China demand.

Focus is also on zinc stocks in LME approved warehouses (MZNSTX-TOTAL) which at 48,975 tons have dropped 60% since the middle of July. Cancelled warrants or metal marked for delivery at 36% indicate another 17,600 is due to leave the LME system.

Low stocks have fuelled concern about the availability of zinc on the LME market and created a premium or backwardation for the cash contract over the three-month forward (CMZN0-3).

Last week the premium climbed above $30 a ton to its highest since October last year. It closed around $27 a ton on Monday.

Three-month zinc ZNC1! was down 0.2% at $2,974 a ton after earlier matching Monday’s six-month high at $2,985.

In other metals, aluminium ALI1! was up 0.1% at $2,704 a ton, lead LEAD1! was flat at $2,002, tin FTIN1! climbed 0.5% to $34,825 and nickel NICKEL1! retreated 0.2% to $15,400.
Source: Reuters