Copper slips as inventories climb and China premiums dip

LONDON: Copper fell from a two-week high on Wednesday on worries over demand as inventories continued to increase and premiums for the red metal into top consumer China fell.

Benchmark copper on the London Metal Exchange (LME) shed 0.8% to $8,974.50 a tonne in official trading. The metal touched its highest since March 23 at $9,104 in the previous session.

Copper inventories in LME-registered warehouses have since surged to 150,325 tonnes compared to 74,200 tonnes at the end of February.

Stocks have also climbed elsewhere.

"Stocks have almost doubled since the lows in February. That's not a good sign in supporting the narrative around any immediate deficit," said ING analyst Wenyu Yao.

Marex Spectron's Alastair Munro said there had "been likely producer sell interest", where metal producers take advantage of spikes in prices to hedge, selling their output in advance.

Meanwhile, the Yangshan copper premium is at its lowest since November at $54 a tonne, pointing to weakening demand for imports into China. The premium reflects the amount that buyers are willing to pay on top of LME copper price for physical delivery.

But analysts said demand should be seasonally stronger in the second quarter.

SPREADS: The LME cash copper contract commands a $7-a-tonne premium over the three-month contract compared to a high of $62.30 in February, when stocks were low.

POSITIONING: Investor interest in copper has waned, with the net long position in LME copper down to 22% of open interest from 62% at the end of February, broker Marex Spectron said.

CONCENTRATES: Chilean miner Antofagasta sold 10,000 tonnes of copper concentrate for June shipment at treatment and refining charges of about $10 a tonne and one cent a pound, three sources with knowledge of the deal said.

OTHER PRICES: Aluminium fell 0.4% to $2,258.50 tonne, zinc added 0.4% to $2,835, lead rose 0.4% to $1,975.50, tin was up 0.2% at $25,874 while nickel edged down 0.1% to $16,731.