Copper prices fall on weaker-than-expected China demand

HANOI: Copper prices fell on Wednesday as declining premiums and rising inventories showed signs of a weaker-than-expected demand in China, the world's biggest metals consumer.

Three-month copper on the London Metal Exchange was down 0.5% at $9,006 a tonne by 0602 GMT, while the most-traded May copper contract on the Shanghai Futures Exchange slid 0.4% to 66,980 yuan ($10,246.92) a tonne.

Yangshan copper premium was last at $57 a tonne, hovering around its lowest since Nov. 30, 2020, indicating subdued demand for imported copper into China, where consumption is expected to be strong in the second quarter.

Meanwhile, inventories have been rising in LME and ShFE warehouses.

"At present, because copper prices are still relatively high, downstream buying is still not very strong," said Huatai Futures in a note.

"But with the arrival of the peak consumption season, downstream purchases will gradually begin to recover, and destocking in the second quarter is still a relatively high probability event," they said.

The price drop in metals also came amid fears of policy tightening in China following recent strong economic data in the world's second-largest economy that have already pressured its equities market.

FUNDAMENTALS

• LME aluminium fell 0.5% to $2,257 a tonne, nickel declined 0.2% to $16,700 a tonne, while tin rose 0.6% to 25,970 a tonne.

• ShFE aluminium declined 0.4% to 17,475 yuan a tonne, tin dropped 0.6% to 184,660 yuan a tonne, while zinc rose 0.3% to 21,850 yuan a tonne.

• Major Indonesian tin producer PT Timah's 2021 refined tin output is seen falling 25.6% on-year to 34,000 tonnes, while sales of the product are set to fall 44.4% annually to 31,000 tonnes this year, a company official said.

• However, refined tin exports from Indonesia jumped 33.1% in March from 6,043.21 tonnes in the year-ago period.