Copper retreats on fears over Chinese price crackdown
- Copper on the London Metal Exchange (LME) was set for its biggest weekly drop since January after a sizzling rally with near 40% gains since the start of the year to a record peak of $10,747.50 last week.
LONDON: Copper prices eroded further on Friday as some investors took profits and others worried about threats by top consumer China to curb surging commodity prices.
Copper on the London Metal Exchange (LME) was set for its biggest weekly drop since January after a sizzling rally with near 40% gains since the start of the year to a record peak of $10,747.50 last week.
By 1015 GMT on Friday, three-month LME copper had slipped 0.3% to $10,019 a tonne, down 2.1% on the week.
"It's the potential risk of Chinese authorities clamping down on prices that seems to be the catalyst for the turnaround this week," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"The turnaround you could argue was overdue. The market had almost gone vertical during the past month and so we seem to be entering a consolidation phase right now."
Hansen said a further leg of the correction could take LME copper down to about $9,600 a tonne.
China, the world's biggest copper user, on Wednesday said it would strengthen its management of commodity supply and demand to curb "unreasonable" increases in prices and prevent them from being passed on to consumers.
The most-traded June copper contract on the Shanghai Futures Exchange closed 1.2% down at 71,980 yuan ($11,189.01) a tonne.
"With nervousness creeping into equities globally and the shiny world of bitcoin starting to become tarnished, it looks like the markets could be in for a bumpy ride," said Malcolm Freeman, a director at UK broker Kingdom Futures.
LME aluminium gained 1.3% to $2,428 a tonne as a consultancy forecast that almost 1 million tonnes of smelting capacity in drought-hit Yunnan province in southwest China could be shut temporarily owing to restrictions on electricity supply.
The global nickel market deficit widened to 16,100 tonnes in March from 600 tonnes in February, data showed.
LME zinc gained 1.5% to $3,004 a tonne, lead rose 0.2% to $2,221, nickel shed 0.3% to $17,105 and tin was down 0.8% at $29,505.
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