LONDON: Copper prices slipped on Tuesday after a steep rally on worries about rising coronavirus cases and 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 a top U.S diplomat said there was room for sanctions against Chinese officials and enterprises involved in coercion in 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.
Three-month copper on the London Metal Exchange was down 1% at $6,507 a tonne by 1600 GMT.
Supervisors at Antofagasta Minerals' Centinela copper mine in Chile have voted in favour of strike action, pending mediation.
The premium of LME cash copper over the three month contract rose to $9 a tonne by Monday's close, the highest since May last year and compared to a discount of $30 about a month ago, indicating tight supplies in LME warehouses. It was last at a premium of $4.
LME aluminium lost 0.3% to $1,684.50 a tonne, zinc dropped 3.1% to $2,191.50, nickel fell 0.9% to $13,590, lead shed 1.7% to $1,849 and tin gave up 0.9% to $17,285.
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