Copper slips as rising stocks highlight poor demand prospects
Copper prices slipped on Thursday as poor demand prospects particularly in top consumer China and an oversupplied market were reinforced by further inventory rises in London Metal Exchange approved warehouses.
Benchmark copper CMCU3 on the LME was down 0.4% at $9,868 a metric ton at 0913 GMT. Prices of the metal used in power and construction have recovered since hitting 10-week lows of $9485.5 on June 27.
Optimism that China’s leaders will aim to boost growth with stimulus at their third plenum meeting on July 15-18 had helped support industrial metals in recent days.
“After the industrial metals managed to regain some lost ground on renewed rumours of stimulus measures in China, it seems that these hopes are fading again,” said Julius Baer analyst Carsten Menke.
“For the still struggling property market, we believe the government’s focus remains on reinstating trust rather than starting a new construction wave.”
Data releases over the next few days on China’s yuan loans and total social financing, widely watched by metals analysts, could yield clues to future demand.
Stocks of copper in LME warehouses jumped 11,300 tons on Wednesday taking the total to 206,775 tons, the highest since October 2021 and nearly double the levels seen in the middle of May.
Most of the deliveries MCUSTX-TOTAL are to warehouses in South Korea and Taiwan, the closest delivery locations for exports from China, usually a net importer.
Lack of concern about nearby supplies has pushed the discount for the cash over the three-month copper contract CMCU3 to a record high above $160 a ton.
Elsewhere, nickel CMNI3 bounced off the 14-week lows hit on Wednesday on funds and traders squaring their bets on lower prices after BHP Group BHP.AX said it will suspend its Western Australia nickel operations from October.
Nickel prices were last up 0.3% at $16,935 a ton. They have come under pressure from higher LME stocks MNISTX-TOTAL, which at 98,382 tons have more than doubled since November.
In other metals, aluminium CMAL3 climbed 0.4% to $2,494, zinc CMZN3 gained 0.4% to $2,978, lead CMPB3 rose 0.6% to $2,192 and tin CMSN3 advanced 0.5% to $35,180.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; Editing by Eileen Soreng, Sonia Cheema and Mrigank Dhaniwala)