LONDON: Copper prices pulled back from a six-month peak on Tuesday, pressured by lacklustre demand in top metals consumer China and as bullish investors trimmed their positions.
Three-month copper on the London Metal Exchange (LME) slipped 0.1% to $8,855 a tonne by 1505 GMT after touching $8,870 on Monday for its strongest since last June.
“We have to consider how much of that move higher was based on assumptions rather than actual demand. Most of the activity the market is pricing in is not really going to happen until we get back after the Lunar New Year break,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“Also, technically, we’re banging our head against some key resistance, which may attract some profit taking in the short term.” The copper market is just below major resistance at $8,900 a tonne, which it is likely to struggle to break above in the short term, Hansen added.
Data from China was mixed, with Chinese aggregate financing data worse than expected while bank lending was stronger, said Al Munro at broker Marex.
New bank lending in China last month rose unexpectedly from November as the central bank continued to support the COVID-ravaged economy.
The rally in copper and other base metals was driven China’s reopening of its borders after years of COVID-related restrictions.
But physical demand for metals is expected to slow as China enters its week-long holiday to celebrate the Lunar New Year over Jan. 23-27.
The Yangshan copper premium, which indicates demand for imported copper into China, was quoted at $37.50 a tonne on Monday, down from $152.50 a tonne less than three months earlier.
Among other metals, LME aluminium added 0.8% to $2,457 a tonne, but zinc eased 0.7% to $3,183.50, lead dropped 2.5% to $2,194.50, nickel dipped 0.1% to $27,410 and tin was down 0.7% at $25,675.
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