September 21, 2017 / 4:27 AM / 2 years ago

METALS-London metals slip after Fed raises rate hike expectations

(Adds comment, detail, updates prices)

By Melanie Burton

MELBOURNE, Sept 21 (Reuters) - London metals came under pressure on Thursday after the Federal Reserved raised expectations of one more rate hike this year, lifting the dollar and raising prospects of higher costs for industrial metals.

Copper and zinc fell 1 percent each, with copper reaching a one-month low, while nickel fell 2 percent.

The dollar rose to a two-month high against the yen and extended its gains against the euro after a hawkish-sounding Federal Reserve heightened expectations for an interest rate hike in December.

“Looking deeper into the Fed comments it seems there is room for a rate rise in December and that was enough to push the USD to two-month highs against most Asian currencies,” Kingdom Futures said in a report.

“The underlying trend suggests growth in consumption of metals and the prospect of lack of supply as the markets look to 2018.”


* LME COPPER: London Metal Exchange copper had slipped by 0.9 percent to $6,468.50 a tonne by 0402 GMT, following a slightly softer close in the previous session. Prices earlier fell to $6,441.50 a tonne, the weakest since Aug. 18.

* SHFE COPPER: Shanghai Futures Exchange copper slid by 1 percent to 50,290 yuan ($7,632) a tonne. Premiums crept up by $2.50 to $65 for metal in China after LME cash-3 spreads MCU0-3 ballooned to the widest in almost a decade this week, making metals storage more attractive.

* FED: The U.S. Federal Reserve left interest rates unchanged on Wednesday but signalled it still expects one more increase by the end of the year despite a recent bout of low inflation.

* LME ALUMINIUM: LME aluminium eased from five-year highs tipped the session before but expectations of tighter supply into early next year underpinned prices.

* SHFE ALUMINIUM: Shfe aluminium rallied 1 percent as China’s aluminium makers begin to ramp down production ahead of mandated capacity closures during the winter heating season. Shfe aluminium is trading at six-year highs, above 17,000 yuan a tonne, and open interest is at record levels of above 1 million lots.

* CHINA ALUMINIUM PRODUCTION: Production cuts are already feeding through into lower output from the world’s top producer of the metal after Beijing’s campaign to close illegally built capacity earlier this year. Total Chinese production in August was 2.64 million tonnes, compared with 2.686 million tonnes in July, the International Aluminium Institute said.

* US ECONOMY: U.S. home resales fell to their lowest in a year in August as Hurricane Harvey depressed activity in Houston and a persistent shortage of properties on the market sidelined buyers.

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Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 6.5891 Chinese yuan)

Reporting by Melanie Burton; Editing by Subhranshu Sahu

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