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London copper set for first quarterly drop in six as Fed taper-talk weighs

London copper was set on Thursday for its first quarterly drop in six, as the prospect of the U.S. Federal Reserve scaling back its pandemic stimulus puts pressure on the metal seen as a gauge of global economic health.

Talk of policy tightening in the United States has boosted the dollar, making greenback-priced metals more expensive for holders of other currencies.

Three-month copper on the London Metal Exchange was down 0.2% to $9,140 a tonne by 0720 GMT, after hitting a one-week low. It has shed almost 4% in September and around 2.5% in the third quarter.

The most-traded November copper contract on the Shanghai Futures Exchange closed down 1% at 67,950 yuan ($10,508) a tonne.

Losses were limited as Rio Tinto Plc declared force majeure on some copper cathode contracts after shutting the smelter at its Kennecott mine in the United States following an accident last week.

“Prices have edged lower, but they have not collapsed since the highs reached in May and we expect prices to trade sideways over the coming months,” Fitch Solutions said in a note.

“Prices continue to remain elevated on the back of tight inventories,” it added, revising up its copper price forecast for 2021 to $9,200 a tonne from $8,700. It also raised its 2022 price estimate to $8,800 a tonne from $8,370.

Meanwhile, data showed ShFE copper stocks fell by 2.5% from last Friday to just 43,525 tonnes, the lowest since May 2009.

ShFE tin closed down 1.9% at 269,460 yuan a tonne but still clocked its best quarter on record with a 31% jump.

Tin, aluminum and zinc were all on track for their sixth straight quarterly gain in London and Shanghai, while LME lead was heading for a quarterly drop of around 6%.

China’s factory activity unexpectedly shrank in September as high raw material prices and power cuts pressured manufacturers in the world’s second-largest economy.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; additional reporting by Tom Daly; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

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