MELBOURNE: London copper prices eased back from near their highest in two weeks on Thursday, after sharp rallies earlier this week on brightening prospects for the U.S. economy and after a rally across China's steel sector that fuelled speculative buying in base metals.
Also helping to support physical copper demand, China's offshore yuan slipped to a fresh six-year low on Thursday after the People's Bank of China set a weaker midpoint.
"The very recent price rally across the industrial commodities space may also be related to the recent sharp depreciation of RMB against USD, which should boost RMB-denominated asset prices and Chinese traders' appetite in importing refined metals as hedge against depreciating currency," said Citi in a note.
"In the near future, we are unlikely to see similar price spikes across different products. Individual commodities should follow their own fundamentals instead."
Three-month copper on the London Metal Exchange had slipped 0.3 percent to $4,724 a tonne by 0356 GMT, after closing little changed in the previous session when it stretched to its highest since Oct. 13 at $4,759 a tonne.
Shanghai Futures Exchange copper slipped 0.5 percent to 37,750 yuan ($5,570) a tonne.
Shanghai copper premiums rose $10 to $85, data showed on Wednesday.
"Strong enquiries for copper in Asia, with deals done at $10 a tonne for Chilean copper in Korea," said broker Triland in a note.
"Spreads remain bid on strong LME prices and good demand for warrants. LME stocks down slightly by around 10,000 with cancellations and withdrawals mainly in Asia warehouses."
ShFE aluminium eased 2 percent, paring a 4.3 percent gain in the previous session, its biggest single-day climb in more than a decade as it plays catch-up with the searing rally in the price of key input material coal.
"Traders keen to purchase in Asia for shipments to Europe and USA where higher premiums are traded," Triland added.
In wider markets, new U.S. single-family home sales unexpectedly rose in September, pointing to sustained demand for housing even as data for the prior three months was revised lower.
Global demand for nickel is expected to increase to 2.11 million tonnes in 2017 as against two million tonnes in 2016, the International Nickel Study Group (INSG) said.
A suspended Philippine nickel miner said it has sued government environment agencies for a nearly four-month stoppage of its operations, in the first legal challenge to the state's environmental crackdown on the mining sector.
Privately backed Auctus Minerals is gearing up to start zinc production at two mines in Australia's northeast by around August next year, just as a deficit in the global zinc market is set to bite.
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