Copper eases from peak as market keeps focus on supply risks

BEIJING: Copper eased from a record high on Tuesday as investors stayed focused on future supply risks, following China’s planned output cuts and Codelco’s premium hike.

The most-traded copper contract on the Shanghai Futures Exchange was down 0.15% at 88,700 yuan ($12,535.33) per metric ton, as of 0240 GMT, after touching a record high of 89,920 yuan a ton earlier this session.

Benchmark three-month copper on the London Metal Exchange declined 0.77% to $11,165 a ton.

The market is still focused on supply risks, as investors assess the impact of major Chinese smelters’ plan to cut production by 10% next year.

Smelters’ plan to cut the output reinforced the outlook that the supply of refined copper will turn tight, analysts at Chinese broker Jinrui Futures said in a note.

Focus is also on the Codelco premiums, which saw a surge in offers for term supply next year.

The new offers were viewed as designed for buyers able to tap profits from Comex-LME arbitrage by delivering to warehouses in the US, adding to concerns that copper supply will be tight elsewhere.

The US dollar continued to weaken, as hopes for a December interest rate cut by the Federal Reserve remained high.

A weaker dollar supports the market by making commodities traded with the greenback cheaper for investors using other currencies.

Among other SHFE base metals, zinc rose 0.91%, lead gained 0.29%, nickel nudged 0.12% higher, aluminium inched up 0.07%, and tin declined 0.85%.

Elsewhere on the LME, aluminium dropped 0.40%, zinc and nickel each dipped 0.39%, lead was down 0.30%, and tin declined 0.87%.