Dollar Strength Squeezes Copper and Zinc Supplies
Copper and zinc prices have declined due to the strength of the US dollar. The dollar's firmness puts pressure on industrial metals, making them more expensive for non-US buyers when priced in dollars.
According to Reuters, softer US factory data and fresh rate-hike bets contributed to this trend, lifting borrowing costs and cooling demand expectations for construction and manufacturing.
Zinc is an exception, however. Despite a firm dollar, zinc's cash-to-three-month spread has remained in 'backwardation,' where spot prices are above futures, indicating that buyers are willing to pay more for immediate supply.
The London Metal Exchange (LME) reported 30,875 tons of canceled warrants, meaning a significant amount of warehouse metal is set to be withdrawn from the market. This could lead to tighter supplies in the near term.