Copper hits 7-week low as China to sell strategic stockpiles

LONDON: Copper prices extended their downturn on Wednesday, touching the lowest in over seven weeks after top metals consumer China confirmed rumours it would liquidate some of its stockpiles.

Weak economic data from China, which accounts for about half of global copper demand, added pressure to the market as factory output and retail sales missed expectations.

"No doubt that Chinese efforts to curb prices is playing out and having a negative impact on otherwise bullish price sentiment. It highlights a market that has lost momentum," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

China announced plans on Wednesday to release copper, aluminium and zinc in batches from its national reserves to curb commodity prices.

Three-month copper on the London Metal Exchange slipped 0.3% to $9,538 a tonne in official trading after earlier touching its lowest since April 23 and slumping by 4% on Tuesday.

Copper touched a record peak of $10,747.50 last month, having surged nearly 40% since the year began as speculators bet on rising demand from a green transformation.

"The reason why copper has rallied in the first place has not gone away, but we may have a mismatch between the price action relative to the actual pickup in demand," Hansen said, adding that downside targets were $9,300 and $9,000.

The most-traded July copper contract on the Shanghai Futures Exchange closed down 2.7% at 68,450 yuan a tonne.

The Yangshan copper premium fell to $21 a tonne, its lowest since February 2016 and 81% lower than May 2020, indicating weak demand for imported metal into top consumer China.

LME on-warrant copper inventories rose to their highest in a year at 130,925 tonnes.

LME aluminium fell 0.6% in official activity to $2,452.50 a tonne, zinc dropped 1.5% to $2,983, nickel shed 1.2% to $17,519, and tin lost 0.7% to $31,254, but lead rose 0.1% to $2,177.50.