LONDON: Copper prices slumped on Tuesday as investors shed some of their bullish positions on uncertainty ahead of central bank meetings.
Benchmark copper on the London Metal Exchange (LME) had dropped 1.9% to $8,970 a tonne by 1700 GMT while prices on Comex fell 1.6% to $4.075 per pound.
Copper hit a 9-1/2 year peak of $9,617 last month, having surged by 24% since the start of the year.
“There’s lots of positive news already priced in, lots of positive expectations about electric vehicles. It’s quite natural for some of the smart money to take profits or stay on the sidelines,” said Xiao Fu, head of commodity market strategy at Bank of China International.
The US central bank’s two-day policy meeting concludes on Wednesday amid worries over inflation, driving US 10-year borrowing costs to their highest in more than a year.
“Global central banks still have an easing bias, although the market is very worried about inflationary prospects, so you have this discrepancy and that introduces uncertainty,” Fu said.
A workers’ union at Antofagasta’s Los Pelambres mine in Chile will agree to extend government-mediated labour talks into next week in an effort to ward off a strike at the sprawling copper deposit, a union leader said.
LME copper inventories rose to a two-month high, having gained 41% over the past two weeks.
Aluminium on the Shanghai Futures Exchange hit a 9-1/2 year high as supply concerns rose after an aluminium hub in top consumer China ordered power cuts and output curbs.
CRU analyst Wan Ling said shutdowns in Inner Mongolia, a major aluminium-producing region, could translate to a 100,000 tonne reduction in annual aluminium output.
On the LME, three-month aluminium gave up 0.7% to $2,201.50 a tonne.
LME nickel dipped 0.4% to $16,155 a tonne, zinc fell 1.9% to $2,805.50, lead declined 1.5% to $1,933.50 and tin shed 0.8% to $25,120.
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