Copper Prices Bounce Back from Three-Week Low Amid Fed Rate Hike Expectations
Copper prices rebounded from their lowest level in over three weeks on Wednesday, despite expectations of a US Federal Reserve interest rate hike later in the day. Three-month copper on the London Metal Exchange rose 0.53% to $14,158 a metric ton by 0330 GMT, after touching $13,926 on Tuesday.
The most-traded copper contract on the Shanghai Futures Exchange gained 0.64% to 107,610 yuan ($16,037.97) a ton. Markets were pricing in an over 90% chance of a 25-basis-point Fed rate hike, up from near 60% a week earlier, in response to sticky inflation.
Higher interest rates typically pressure economic growth, which is a headwind for industrial metals. However, falling treatment charges and weak smelter margins provided support to copper prices, according to Jinrui Futures. Signs of firmer physical demand in top consumer China also emerged, with the Yangshan copper premium rising to $110 a ton on Tuesday.