Fading hopes of a US-Iran peace deal push copper lower
- Benchmark three-month copper on the LME was down 1.1% at $13,771.50 a metric ton
LONDON: Copper prices fell on Friday, with risk sentiment in growth-dependent metals affected by renewed worries about inflation as hopes for a U.S.-Iran peace deal dim.
Benchmark three-month copper on the London Metal Exchange was down 1.1% at $13,771.50 a metric ton at 0953 GMT, finding support above its 21-day moving average, currently at $13,728.
Copper, used in power and construction, is up 11% so far this year, having hit a record high of $14,527.5 in January. Analysts at several investment banks upgraded their price forecasts this week, with Citi expecting $15,000 within six to 12 months.
“High prices will inevitably test demand elasticity, particularly in China where buyers have historically shown sensitivity to elevated prices,” said Ole Hansen, head of commodity strategy at Saxo Bank.
The Yangshan copper premium, a gauge of Chinese appetite for imported copper, fell 9% this week to a five-week low of $64 a ton.
Supporting copper is a premium of COMEX copper contracts over the LME benchmark ahead of a recommendation from the U.S. Department of Commerce on possible import tariffs, which the market expects by end-June.
This premium is attracting inflows to COMEX copper stocks in the U.S. - already at a record high of 583,055 tons – and tightening availability of visible inventory elsewhere.
Available stocks in LME-registered warehouses, according to daily LME data, are at 240,050 tons, the lowest since February 24, and cancelled stocks represent 37% of the total.
Reflecting less availability for near-term supply, the discount for the LME cash copper contract to the benchmark ended Thursday at $11.5 a ton, compared with $58 a month ago.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 4% this week to 169,512 tons, the lowest since end-December, while tin stocks rose 49% to 12,358 tons.
In other LME metals, aluminium fell 0.4% to $3,651.50, zinc lost 0.2% to $3,578.50, lead was 0.1% lower at $2,014, tin slid 2.5% to $54,255, while
nickel was steady at $18,690.
Comments