Surging consumer confidence and an improving housing sector in the United States pushed the greenback higher, dampening appetite for dollar denominated assets from holders of other currencies.
Three month copper on the London Metal Exchange had dropped by 1% to USD 7,246.50 per tonne by 0720 GMT erasing the previous session's small gains. Copper prices have recovered around 7% from the year's low below USD 6,800 per tonne hit last month but have been trapped in a broad range of USD 7,100 to USD 7,500 since early May. Prices are down more than 8% for the year.
The most traded September copper contract on the Shanghai Futures Exchange erased early gains to finish flat at CNY 52,290 per tonne.
Ms Chunlan Li an analyst at metals consultancy CRU in Beijing said that “Chinese copper demand is at its strongest in the Q2 after the Lunar New Year break and before factories wind down over summer. It's still peak demand season in China but as the weather gets hotter maybe from July, demand for copper tube for example, will slide a little."
She said that "We haven't seen such signals yet. We see strong price support below USD 7,000 per tonne. Copper prices are more related to macro factors for now."
A shortfall of scrap metal has crimped supply in China, pushing up premiums and encouraging traders to import metal, shielding prices from the country's growth slowdown. Adding to concerns the world's second largest economy is losing momentum, the International Monetary Fund cut to 7.75% its growth forecast for China this year from 8% citing a weak world economy and exports.