Copper prices on stronger dollar, demand worries

Copper prices were lower Thursday after the US dollar strengthened for the fifth session in a row, while comments from two big producers hinted at coming declines in demand from China, and US factory orders did not add as much as had been anticipated.

Officials from two big copper producers, Freeport-McMoRan (NYSE: FCX) and Codelco, the government-owned Chilean miner, said that China’s efforts to rein in its economy could hurt copper demand, while US factory orders were up just 1.2 percent in April, rather than by the expected 1.8 percent.

Additionally, miner Xstrata (LSE: XTA) announced that it will suspend projects worth A$7 billion in Australia in response to a proposed tax on mining profits there.

July copper was down 9.4 cents to $2.95 per pound in New York, the biggest decline by a most-active contract in over a week, while three-month contracts on the London Metal Exchange were down $143 to $6,525 per tonne.

The declines came even though LME-monitored inventories were down for the 12th consecutive session, as the declines have barely made a dent in stockpiles that have grown by 55 percent in the past year.

Most other base metals prices were also lower, led by a 5 percent decline by nickel on the LME, but tin was higher on the sesison.

Precious metals prices also fell, with August gold down $12.60 to $1,210 per troy ounce in New York trade after a well-known investor said he recently cut his gold holdings in half, while July silver fell 38 cents to $17.93 per troy ounce and July platinum dropped $7.50 to $1,542.90 per troy ounce.