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Copper dips as U.S. inflation data boosts dollar

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HANOI — Copper prices eased on Thursday, as the dollar held gains on higher-than-expected U.S. inflation, making greenback-priced metals more expensive for holders of other currencies.

The most-traded June copper contract on the Shanghai Futures Exchange declined 0.8% to 75,790 yuan ($11,740.01) a tonne at 0533 GMT, while three-month copper on the London Metal Exchange fell 0.3% to $10,410 a tonne.

The dollar was supported by higher Treasury yields after a surprisingly strong rise in U.S. consumer prices fanned fears about an increase in inflationary pressure.

The consumer price index jumped 0.8% last month, its largest gain since June 2009. Economists polled by Reuters had forecast the CPI would climb 0.2%.

“The April CPI data…was significantly higher than market expectations. However, the current orientation of loose monetary policy is not expected to change immediately,” China-based Huatai Futures said in a report.

“Fundamentally, we also need to focus on whether downstream procurement can recover to a certain extent when prices fall. As the current second quarter is still in the traditional peak consumption season…the recommendation to buy on dips is still maintained for the time being,” the company said.

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FUNDAMENTALS

* China will monitor changes in overseas and domestic markets and effectively cope with a fast increase in commodity prices, the state council said.

* Canadian miner Turquoise Hill Resources Ltd saw its full-year copper production at 150,000-180,000 tonnes, slightly down from a previous estimate of 160,000-180,000 tonnes, after reporting first-quarter output up 29% year-on-year to 45,449 tonnes.

* LME aluminum rose 0.3% to $2,488 a tonne, nickel dropped 2% to $17,440 a tonne while tin declined 1.1% to $29,330 a tonne.

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* ShFE nickel was down 2.8% at 128,630 yuan a tonne, tin lost 2.3% to 191,750 yuan a tonne while lead declined 2.1% to 15,290 yuan a tonne.

($1 = 6.4557 yuan) (Reporting by Mai Nguyen; Editing by Rashmi Aich)

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