Base metals fall on U.S. rate hike jitters


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BEIJING — Prices of base metals fell on Wednesday as fears of more aggressive rate hikes by the U.S. Federal Reserve outweighed support from supply challenges and tightening inventories.

The three-month copper on the London Metal Exchange slid 0.5% to $7,830.50 a tonne by 0713 GMT, extending losses from the previous session.

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The most-traded October copper contract on the Shanghai Futures Exchange fell 1.4% to close at 62,280 yuan ($8,943.65) a tonne.

U.S. consumer prices unexpectedly jumped in August to an annual pace of 8.3%, not far from the four-decade peak reached in June.

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The hotter-than-expected consumer price index (CPI) reading fueled bets that the Fed would certainly hike interest rates later this month, which could slow down the global economy and dampen demand for metals.

Subsequently on Tuesday, the dollar posted its biggest daily percentage gain since 2020.

A firm dollar pressures commodities priced in the greenback by making them more expensive for holders of other currencies.

Low inventories and supply interruption in China helped base metals limit their losses.

The southwestern Yunnan province recently ordered aluminum producers to cut their power consumption by 10%.

ShFE warehouse aluminum stocks stood at 79,745 tonnes on Friday, after dropping 22.9% in the previous three weeks from 103,413 tonnes on Aug.19.

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“Low stocks are the only supporting factor in the market, but macro weakness is holding us back from taking a long position,” an aluminum trader said.

LME tin dropped 1.5% to $21,060 a tonne, aluminum declined 0.7% to $2,296 a tonne and nickel fell 1.4% to $23,945 a tonne.

ShFE nickel lost 1.6% to 189,000 yuan a tonne, tin shed 4.6% to 173,490 yuan a tonne, aluminum was down 0.9% at 18,625 yuan a tonne, and zinc dipped 0.2% to 24,760 yuan a tonne.

For the top stories in metals and other news, click or ($1 = 6.9636 Chinese yuan) (Reporting by Siyi Liu and Dominique Patton; Editing by Subhranshu Sahu and Uttaresh.V)


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