METALS-Profit-taking, lack of China interest weigh on copper

By Pratima Desai

LONDON, Sept 16 (Reuters) - Copper slipped on Tuesday as a lack of buying interest in China, the world's leading consumer, prompted profit-taking after prices rallied to 15-month highs on the previous day while a lower dollar helped limit losses, traders said.

Benchmark copper CMCU3 on the London Metal Exchange was down 0.5% to $10,131 a metric ton at 1604 GMT. On Monday, it touched $10,192.50 a ton for the highest price since June 2024.

Copper's rapid climb through the psychological level of $10,000 a ton 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 rate cut have weighed on the U.S. currency, which makes dollar-priced metals cheaper for holders of other currencies when it falls, potentially boosting 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.

The market's 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 tons are 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.

The premium traded above $31 a ton on Tuesday, its highest level since October last year.

Three-month zinc CMZN3 rose 0.1% to $2,982 a ton after earlier hitting $3,003.5, it's highest price since early January.

LME aluminium CMAL3 was up 0.5% to $2,714 a ton, lead CMPB3 gained 0.3% to $2,009, tin CMSN3 climbed 0.5% to $34,820 and nickel CMNI3 eased 0.1% to $15,415.