Copper Slides as Stronger Dollar Deters Chinese Buyers

Copper prices took a hit on Tuesday as the US dollar strengthened, making imports more expensive for buyers using other currencies. The three-month copper contract on the London Metal Exchange (LME) fell by 0.66% to $14,651 a metric ton, while the Shanghai Futures Exchange (SHFE) contract slipped 0.23% to 110,960 yuan a ton.

The immediate driver of this decline was the currency market. When the dollar rises, it can pressure metals by reducing the purchasing power of non-US buyers and affecting the 'import arbitrage' math between SHFE and LME prices.

This matters because China's appetite for imported copper is often reflected in the Yangshan import premium, a fee that buyers pay to get metal delivered into China. This premium fell to $117 a ton on Tuesday, down from its peak at the start of the month but still 62.5% higher.

The decrease suggests that China's pull on seaborne cathode may be easing, even if some domestic restocking continues ahead of smelter shutdowns tied to late-September and early-October holidays. Strong US imports ahead of a potential tariff on refined copper have also been supporting markets, although analysts at Jinrui Futures noted that weekly US inflows have started to cool.