LONDON- Copper prices fell for a third day on Wednesday as expectations of US interest rate rises lifted the dollar to 16-month highs, making metals priced in the greenback costlier for buyers with other currencies.
Benchmark copper on the London Metal Exchange (LME) was down 1.6 percent at $9,404 a ton.
Prices of the metal, used in construction and to conduct electricity, hit a record high of $10,747.50 in May but have since lost momentum as economic growth has slowed.
The dollar was steady on Wednesday but has surged in the last week as strong US economic data and high inflation lead many investors to expect a US rate hike as early as mid-2022.
That has dragged copper to its 200-day moving average, a key technical indicator currently at $9,408 a ton, said Saxo Bank strategist Ole Hansen.
“If we close below that level, we could see the market reverse down to $9,000,” he said, but added that prices were unlikely to fall far because demand will rise as the world builds infrastructure for electrification. Meanwhile, the global markets will need four times the nickel and double the copper in the next 30 years to facilitate a decarbonized world, a BHP Group executive said.
“Some of the modelling that we have done showed that in, let’s say a decarbonized world … the world will need almost double the copper in the next 30 years than in the past 30,” said Vandita Pant, BHP’s Chief Commercial Officer, at the FT Commodities Asia Summit.
“And for a commodity like nickel, that quadruples. So four times nickel needed for the next 30 years than the past 30 years and all to be done as sustainably as possible,” Pant added.
Both nickel and copper are poised for strong consumption as a result of the transition away from fossil fuels. Nickel is used in electric vehicle (EV) batteries while copper is needed for wiring in the EVs, their charging stations and other renewable energy infrastructure.
