Copper prices hit a one-week low on Wednesday as traders trimmed positions ahead of a decision on U.S. interest rates from the Federal Reserve, while demand from top metals consumer China was muted by the recent copper rally.

Benchmark three-month copper HG1! on the London Metal Exchange lost 1.6% to $9,962 a metric ton by 0955 GMT, remaining above the 21-day moving average which supports it at $9,910.
The metal, used in power and construction, hit $10,192.50, its 15-month high, on Monday.

“China has been on the copper offer this week,” said Alastair Munro, senior base metals strategist at Marex. “But it has really been an absence of any systematic bid and even bearish mean reversion sell signals which have triggered weakness across the complex.”

Traders await clarity from the Fed not just on the expected rate cut but also on the trajectory of future policy, said Neil Welsh, head of metals at Britannia Global Markets.

“With the dollar already down around 10% year-to-date and labour data softening, traders are looking for signals that tonight’s cut could be the first in a series,” he added.

Among other LME metals, aluminium ALI1! lost 0.4% to $2,705 a ton.

It hit a six-month high of $2,720 on Tuesday, when the premium of the cash aluminium contract against the three-month one touched $16 a ton, the highest since March. That indicated tightness in the LME system during the current settlement week, when short position holders had to cut or roll over their contracts.

The premium for buying aluminium tomorrow and selling it the day after – known as tom-next (MALT-0=LX) – fell to $1.5 a ton on Wednesday from $13 a ton on Tuesday.

There was one long position holder with more than 40% of LME September futures’ open interest alongside several short positions, according to the LME data. (0#LME-FBR)

LME zinc ZNC1! shed 0.7% to $2,970, lead LEAD1! eased 0.5% to $1,999, tin FTIN1! slid 1.3% to $34,355, while nickel NICKEL1! fell 1.0% to $15,270.
Source: Reuters