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Markets

Copper slips on worries about Chinese demand after trade data

  • Three-month copper on the London Metal Exchange shed 0.9% to $9,864 a tonne in official trading after rising by 1.7% on Friday.
  • Hansen said if prices extended their retreat, they would likely head towards the 50-day moving average around $9,655.
Published June 7, 2021
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LONDON: Copper prices eased on Monday as investors took fright from weaker than expected trade data from top consumer China showing lacklustre demand.

China's copper imports fell 8% in May from the previous month as record-high prices further eroded buying interest while overall export growth missed analysts' forecasts.

"When we get data like this from China, it highlights the potential risk that their rapid pace of growth is starting to slow," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"It's a market that has lost momentum and traders are responding to that and reducing their exposure. I'm not saying the rally is over, but the market is potentially in need of a period of consolidation, which could take it even lower."

Three-month copper on the London Metal Exchange shed 0.9% to $9,864 a tonne in official trading after rising by 1.7% on Friday.

LME copper has gained 27% so far this year, having retreated from a record high of $10,747.50 touched last month, driven partly by optimism that a green revolution would spur more demand for copper from new uses, including electric vehicles.

Hansen said if prices extended their retreat, they would likely head towards the 50-day moving average around $9,655.

The net long position in copper on the US Comex exchange has tumbled by 58% over the past four weeks to the lowest levels since June last year, he added.

The closely watched Yangshan copper premium, paid on top of London prices for delivery of physical copper into China, is at its lowest since 2016 at $28 a tonne.

Weighing on the metals market was a firmer dollar index , making commodities priced in the US currency more expensive for buyers using other currencies.

LME aluminium dropped 1.5% in official activity to $2,418.50 a tonne, nickel slid 2% to $17,664, zinc lost 0.8% to $2,985.50, lead edged up 0.1% to $2,138.50 and tin slipped 1.2% to $30,500.

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