Copper edges up on softer US dollar ahead of expected Fed rate cut
Sept 17 (Reuters) -Copper prices in London edged up on Tuesday, driven by a softer U.S.dollar and expectations of an interest rate reduction by the Federal Reserve a day later.
Three-month copper on the London Metal Exchange (LME) CMCU3 rose 0.1% to $9,395 per metric ton by 0406 GMT and nickel CMNI3 edged up 0.2% at $16,310.
LME aluminium CMAL3 eased 0.1% to $2,525, lead CMPB3 dipped 0.2% at $2,035 and tin CMSN3 fell 0.3% to $31,850 a ton, while zinc CMZN3 traded nearly flat at $2,945.
A weak dollar brought by aggressive rate cut hopes underpinned commodities, while copper also benefited from slowing inventory inflows and tight mine supply, said Sandeep Daga, a director at Metal Intelligence Centre.
The dollar traded near its one-year low on Tuesday, a day ahead ofthe expected start of an U.S. easing cycle that markets are betting may begin with an outsized rate cut.
A weaker dollar makes greenback-priced metals cheaper to holders of other currencies.
Copper inventories in SHFE warehouses CU-STX-SGH fell to 185,520 tons on Friday, the lowest since Feb. 23.
The fall in inventory points to a continued pick-up in pent-up demand after LME copper price surged to a record level above $11,000 a ton and amid growing tightness in scrap supply in China, said Benchmark Mineral Intelligence analysts in a note.
The premium to import copper into top consumer China SMM-CUYP-CN was at $63 a ton on Friday, compared to a discount of $20 a ton in May.
"However, ... exiting bears... are lifting prices while bulls are looking on. Open interest has been falling. This tells me that despite the latest rally, prices are likely to be range-bound," Daga added.
The Chinese markets are closed for a public holiday.
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Reporting by Mai Nguyen in Hanoi; Editing by Sumana Nandy
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