LONDON: Copper prices retreated to a two-week low on Wednesday as investors awaited more details from an upcoming meeting by Chinese smelters to cut production.
Three-month copper on the London Metal Exchange (LME) was down 0.7% at 8,802$ per metric ton by 1218 GMT. It dipped to $8,792.5 earlier in the session, the lowest since March 13.
LME copper soared to an 11-month high of $9,164.50 on March 18 after top Chinese smelters announced plans for joint production cuts, but did not provide details of the extent or timing of any suspensions.
“The copper rally after Chinese smelters’ plans to cut was slightly overbought,” said Dan Smith, head of research at Amalgamated Metal Trading.
The smelters will have another meeting on Thursday March 28 on plans to bring forward maintenances and reduce loss-making capacity, according to industry sources.
Copper rises as China stock build slows
Adding to the uncertainty about smelter cuts, a state-backed research house said copper output from China was expected to grow by 3% this year.
Also dampening the enthusiasm of speculators was a strong seasonal buildup of copper inventory in China.
The discount of the LME cash copper contract to the three-month contract remained near a record high, signalling expectations of rising supply.
Copper was not far from its fair value, still supported by strong long-term fundamentals, raising the prospect of further upside this year, Smith added, citing data released on Wednesday showing higher Chinese industrial profits.
“Funds are coming back to commodities as a general idea, which always kind of help. Prices and volumes of gold and bitcoin nearing record highs are general signs of more money around looking for opportunities,” he added.
Among other metals, three-month zinc hit its lowest price in nearly four weeks as weak steel demand weighed on the market.
Zinc, mainly used for galvanising steel, was down 1.2% at $2,413 per metric ton after hitting $2,409, the weakest since March 1.
Aluminium declined 0.8% to $2,285.50, nickel edged down 0.3% to $16,590, lead fell 0.8% to $2,003 and tin shed 0.2% to $27,400.
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