METALS-Copper drifts lower on lack of China stimulus, rising output

Copper prices eased on Wednesday, weighed down by worries about a lack of major stimulus and weak demand in the world’s top metals consumer China combined with strong domestic output.

Three-month copper on the London Metal Exchange CMCU3 fell 1% to $8,386 per metric ton by 1005 GMT, extending losses from Tuesday.

“Investors are overwhelmingly looking towards China’s expected stimulus packages, but that could disappoint, which is a concern weighing on metals prices at the moment,” said Edward Gardner, commodities economist at Capital Economics.

“It’s quite downbeat really – weak global demand for many of these metals at the moment and the slowdown in China’s economy combined with decent supply.”

LME copper prices are expected to rise slightly by the end of the year to $8,500 a metric ton, Gardner added.

Demand from China’s power sector, the main consumer of copper, is expected to grow slower in the second half of this year, after posting a healthy gain in the second quarter, according to CITIC Futures.

Chinese consumption will likely grow 3.9% this year, while refined copper production in China will rise 8% with new projects coming online, they added.

Data showed on Wednesday that China’s refined copper production in June jumped 13.6% year on year to another record high.

Higher global prices amid tight overseas inventories have subdued import appetite, pushing down the Yangshan copper import premium SMM-CUYP-CN to $42 a metric ton on Tuesday, down 21.5% from a 2023 high hit two weeks ago.

LME zinc CMZN3 dropped 1.3% to $2,364 a metric ton after LME inventories surged, having shot up 30% in two days to 90,825 metric tons, the highest in 14 months.
Source: Reuters (Reporting by Eric Onstad Additional reporting by Siyi Liu and Dominique Patton in Beijing; editing by David Evans)