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COPPER - LONDON. Copper prices retreated on Tuesday after factory data weakened in leading metals consumer China and as reduced expectations of U.S. interest rate cuts strengthened the dollar.
Three-month copper on the London Metal Exchange (LME) fell 1.7% to $9,415.50 per metric ton by 1425 GMT.
A robust rally in copper fuelled a nearly 20% surge in LME prices during the two months to Monday, when it touched $9,640.50 a ton, the highest since June 2022.
Data on Tuesday showed Chinese industrial output grew 4.5% year-on-year in March, slowing from the 7% pace of January-February and well below analysts' expectations of 6%.
March retail sales were also softer than expected despite the overall economy growing faster than forecast in the first quarter.
"Today it's the economic outlook from China that seems to be troubling the market," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Some speculators were likely liquidating bullish positions, he added.
"Any weakness in the short term will leave the market exposed to long liquidation because some of these recently established longs will be quite trigger happy."
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The dollar hit a five-month high after hotter-than-expected U.S. retail sales figures raised questions about when the Federal Reserve could begin cutting interest rates.
"As funding costs are not going to come down at the rate that the market was looking for, it could dissuade some restocking people were counting on," Hansen said.
A stronger dollar makes metals priced in the currency more expensive to buyers using other currencies.
LME aluminium retreated 0.7% to $2,536 a ton from 22-month highs touched on Monday after the U.S. and Britain banned the London Metal Exchange and CME from accepting new Russian production of the metal.
"The market is having some second thoughts about the initial spike we saw yesterday. As long as it's being produced, it will find its way to the market, maybe not through the normal venues," Hansen said.
LME data on Tuesday showed investors gave notification they wanted to remove nearly 80,000 tons of aluminium, about a quarter of total available stocks, from LME-registered warehouses in Gwangyang, South Korea, a popular location to store Russian material according to traders.
Among other metals, LME nickel, which had also rallied due to the sanctions, shed 1.1% to $17,655 a ton, zinc dropped 1.6% to $2,730.50, lead edged down 0.3% to $2,179.50 and tin eased 1.2% to $31,855.
