Copper drops on profit-taking, improved mine output
- Benchmark copper prices have rebounded by about 50% since March.
- Many pieces were falling into place for the metals during the past two or three months.
Copper fell on Thursday as investors skimmed off profits from a rally that may struggle to make further progress as supply fears ease and demand levels off.
Benchmark copper prices have rebounded by about 50% since March, largely due to worries about curtailed supply and a recovery of the industrial sector in top metals consumer China.
Benchmark three-month copper on the London Metal Exchange shed 1.4% to $6,604 a tonne in official trading after touching the strongest levels in over two years on Tuesday.
"Many pieces were falling into place for the metals during the past two or three months, but now it's much more difficult to build on this recovery backdrop," said analyst Carsten Menke at Julius Baer in Zurich.
"Recent production data out of Latin America has been rather encouraging, in the sense that the worst is behind us in terms of negative impact of the corona crisis. And when it comes to the demand side from China, evidence is growing that there were some temporary elements that were fuelling copper consumption over the past few months."
Reports have shown improving copper mine output in top producer Chile and neighbouring Peru. State-owned Codelco in Chile on Wednesday reported a 2.3% output increase for the first seven months of the year.
A firmer dollar also weighed on the market, making metals priced in the US currency more expensive for buyers using other currencies.
The discount of LME cash zinc to the three-month contract rose to $27.50 a tonne, the highest since April 2017 and compared to a premium of $7 in May. This indicates healthy supply in LME warehouses, where stocks have surged by 80% since late July.
LME aluminium dipped 0.4% to $1,779 a tonne in official activity, nickel dropped 3.3% to $15,184 and zinc slipped 0.7% to $2,514.50.
Lead added 0.1% to $1,939.50 and tin was up 0.2% at $18,379 after touching the highest since July 2019 at $18,510.
Comments
Comments are closed.