Copper retreats from two-year peak as market eyes virus risks

LONDON: Copper prices slipped on Tuesday after a steep rally on worries about rising coronavirus cases and more friction between the United States and top metals consumer China.

Copper had soared about 50% from its 45-month lows touched in March to a two-year peak hit on Monday, largely on supply concerns from the biggest producer Chile.

But copper stumbled along with stock markets and oil after the most populous US state California imposed fresh coronavirus restrictions and the United States rejected China's disputed claims in most of the South China Sea.

"It's a long overdue reality check today that we've had in store for a couple of weeks now. I've been absolutely blown away by just how quickly copper has rebounded," said Kieran Clancy, assistant commodities economist at Capital Economics.

"It's just been rocketing and I think some of that was based on hopes and not reality. There are so many things priced into the copper market that haven't actually happened yet, not least of which being some of the supply risks in Latin America."

Chile's copper miners have largely maintained output, although state-owned Codelco said on Monday it registered a total 3,215 COVID-19 infections and nine deaths due to the pandemic.

Three-month copper on the London Metal Exchange was down 1.4% to $6,480.50 a tonne by 1035 GMT.

"The physical premium in China has risen this week, suggesting this is a short-term correction as demand remains firm and the concerns about disruption in Chile are real," said commodities broker Anna Stablum of Marex Spectron in Singapore.

FUNDAMENTALS

CHILE STRIKE: Supervisors at Antofagasta Minerals' Centinela copper mine in Chile have voted in favour of strike action, pending mediation.

CHINA: China's June unwrought copper imports hit a record on strong domestic demand, scrap shortages and open import arbitrage window.

PRICES: LME aluminium lost 0.8% to $1,677 a tonne, zinc dropped 2.9% to $2,196.50, nickel fell 1.2% to $13,550, lead shed 1.3% to $1,858 and tin gave up 0.8% to $17,290.