LONDON: Copper prices hit their weakest in more than two months on Thursday as more bullish positions were scrapped, inventories kept rising and demand remained lacklustre in top metals consumer China.
Three-month copper on the London Metal Exchange touched an intra-day low of $9,485.50 a metric ton for its weakest since April 17 before recovering to be up 0.2% at $9,562 by 1015 GMT.
“The rise in total exchange copper stocks to over 500,000 ton is not something the market likes when it’s already under pressure from long liquidation,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Copper stocks registered with the world’s big three exchanges have risen above 500,000 metric tons for the first time since August 2021.
LME inventories have surged by 72% since mid-May to 177,750 tons, the highest in more than six months.
“The question is how deep can this correction go. The area just below $9,500 is an important technical level and if we continue lower from there, then we’re potentially looking at $9,100 next,” Hansen said.
Copper edges lower on dollar strength, weak China demand outlook
After rallying to a record high of $11,104.50 on May 20, prices have fallen more than 14% on sluggish economic data from China and uncertainty surrounding U.S. interest rates.
Adding to worries about weak physical copper demand in China was data on Thursday showing China’s industrial profit growth slowed sharply last month.
The most-traded August copper contract on the Shanghai Futures Exchange eased 0.6% to 77,550 yuan ($10,669.18) a ton.
“Inventory levels of copper continue to surge in China, while local premiums remain low, signalling little sign of physical demand to back to euphoric positioning in the West,” TD Securities analysts said in a note dated Wednesday.
In other metals, LME aluminium dipped 0.2% to $2,507 a ton, zinc was little changed at $2,940.50, lead was down 0.3% at $2,189.50 while nickel gained 0.6% to $17,165 and tin rose 0.6% to $32,200.
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