LONDON: Base metals eased on Wednesday after China said it would intervene to lower coal prices and as technical signals indicated some metals were overbought after a steep jump this week.
But extremely low levels of inventories across many metals including copper have kept prices from falling too low, analysts said.
Benchmark copper on the London Metal Exchange (LME) fell 1.5% to $10,005 per tonne by 1135 GMT, in its third straight session of declines.
"We do not believe that the current price setback will mark the beginning of a trend reversal. In recent months, China has used various measures - such as releasing state reserves - in a vain attempt to cool the price rally," said Commerzbank analyst Daniel Briesemann.
The Frankfurt-based bank raised its base metals forecast on expectation that high power prices would lead to further cuts to production.
Low inventories on the LME system pushed prices for copper to a high of $10,452.50 per tonne on Monday, close to the record of $10,747.50 touched in May.
Energy crisis pushes copper towards best week since 2016
The premium of LME cash copper over the three-month contract moderated to about $157 per tonne versus a record high of $1,103.50 touched on Monday, pointing to an easing in concerns over quickly deliverable metal.
On-warrant stocks of copper available to the market in LME-registered warehouses inched up 2,650 tonnes to 17,875 tonnes, still hovering near their lowest level since 1998.
Inventories in Shanghai Futures Exchange (ShFE) warehouses are at their lowest since 2009 at 41,668 tonnes.
"There is very tight copper inventory for copper at the moment and that is still a concern but prices (are) slowing mainly because of technical signals showing that copper were overbought", said Xiao Fu, head of commodity market strategy at Bank of China International (BOCI) in London.
The LME, the world's largest and oldest market for industrial metals, stepped in late on Tuesday, saying it would amend lending rules and implement a backwardation limit and delivery deferral mechanism for copper trading with immediate effect.
Other Metals: LME aluminium fell 1.5% to $3,063 a tonne, zinc added 1.7% to $3,566, lead shed 0.8% to $2,357, tin was steady at $37,700 and nickel was down 0.2% at $20,015.
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