London copper falls from 2-1/2-month high as demand risk lingers

SINGAPORE: London copper prices on Wednesday slipped from a 2-1/2-month high hit earlier in the session, as investors turned cautious about demand recovery in top consumer China.

Three-month copper on the London Metal Exchange snapped a four-session rally and fell 0.3pc to $5,511 a tonne as of 0725 GMT.

The contract hit its highest since March 13 at $5,549.50 a tonne in early Asian hours and has jumped by a quarter since March 19 when it hit its lowest in more than four years.

Copper prices have been supported by solid consumption from China's infrastructure and construction sectors, and hopes for a demand recovery as several major economies reopened from weeks-long coronavirus-induced lockdowns.

But worries over demand continue as other sectors' demand look stagnated, especially in home appliances where exports markets account for a large share of orders.

"China's copper demand from home appliance manufacturers is bad due to the loss in the first quarter and the weakening export demand," said He Tianyu, an analyst with CRU Group, adding that total refined copper demand in China was expected to fall 2pc in 2020 from a year earlier.

The most-traded July copper contract on the Shanghai Futures Exchange closed up 0.6pc to 44,830 yuan ($6,308.84) a tonne, tracking overnight gains in London.

FUNDAMENTALS

OTHER PRICES: LME aluminium advanced 0.5pc to $1,555 a tonne, nickel fell 0.7pc to $12,765 a tonne, while ShFE tin jumped 1.2pc to 136,320 yuan a tonne.

CHINA STIMULUS: China's central bank vice-governor said the economic hit from the coronavirus pandemic was bigger than expected and that more monetary and credit policy support was needed.

CHINA: China's services sector returned to growth last month for the first time since January as the economy recovers from strict coronavirus-induced containment measures, althoughemployment and overseas demand remained weak.