Copper retreats on virus fears and US-China friction

LONDON: Copper dropped from two-year highs on Friday on concerns that souring US-China relations and rising coronavirus infections could undermine metals demand and a nascent global economic rebound.

Three-month copper on the London Metal Exchange (LME) fell 0.2% to $6,424.50 a tonne by 1115 GMT and looked set to snap an eight-week winning streak.

The industrial metal, also seen as a bellwether for economic health, rallied to its highest in nearly 25 months on Monday at $6,633 a tonne on supply worries in top consumer Chile.

But analysts say the price might be overheating and see fair value around $6,000 a tonne.

"On the fundamental side, copper has gotten ahead of itself and I think this is a warranted pullback," said Colin Hamilton, managing director of commodities research at BMO Capital Markets.

CORONAVIRUS: The United States shattered its daily record for coronavirus infections on Thursday, reporting more than 77,000 new cases as the number of deaths in a 24-hour period rose by nearly 1,000, according to a Reuters tally.

TRADE TENSIONS: US President Donald Trump's administration was considering a ban on travel to the United States for all members of the Chinese Communist Party and their families.

POSITIONING: Large holdings of copper warrants and cash contracts have fuelled concerns about nearby supply on the LME market. SPREADS: The concerns can also be seen in the premium for cash copper over the three-month contract, which is at $1.25 a tonne, compared with a discount of $30 a month ago.

RIO TINTO: The global miner said that total mined copper production reached 132,800 tonnes in the three months to June 30, beating a consensus forecast of 114,000 tonnes.

OTHER METALS: Aluminium eased by 0.9% to $1,655 a tonne, zinc fell 1.3% to $2,178, lead lost 0.9% to $1,832, tin dipped 0.1% to $17,345 and nickel was down 1.1% at $13,320.