Copper Heads For Worst Week Since March on China Sale, Firm Dollar

Copper prices were set for their worst week since March on Friday, pressured by China’s plan to sell reserves, and a firm dollar buoyed by the prospect of U.S. interest rate hikes.

Three-month copper on the London Metal Exchange fell 0.4% to $9,282 a tonne by 02:50 WAT on Friday, down 7.2% so far this week.

The most-traded July copper contract on the Shanghai Futures Exchange dropped as much as 2.9% to 67,110 yuan ($10,412.08) a tonne, its lowest since April 15 and also set for a weekly drop.

The dollar was headed for its best week in nearly nine months as investors have scrambled to price in a sooner-than-expected ending to extraordinary U.S. monetary stimulus in the days after a surprise shift in tone from the Federal Reserve.

A stronger dollar makes greenback-priced metals more expensive and less appealing to holders of other currencies.

Earlier this week, top metals consumer China announced a plan to sell state reserves of copper, aluminum, and zinc, in an effort to curb a strong price rally in commodities.

Fundamentals

* LME aluminium fell 0.2% to $2,396 a tonne, while nickel rose 1% to $17,350 a tonne. ShFE aluminium dropped 1.3% to 18,475 yuan a tonne, zinc shed 2.7% to 22,020 yuan a tonne and lead declined 1.4% to 15,095 yuan a tonne.

* LME copper inventories rose to their highest since April 28 at 143,750 tonnes.

* A party controls 50%-80% of available zinc stocks and short-term futures, LME data showed. <0#LME-WHT>

* China will issue new rules on the management of price indexes for commodities and services as the government steps up scrutiny of the country’s commodity markets and battles to contain inflation.