Copper slips as Chinese factory gate prices surge

LONDON: Copper prices fell on Wednesday as data showed Chinese factories were facing the fastest rises in the cost of input materials in 12 years and a Chinese government agency said it would step up monitoring of commodities markets.

Investors were also waiting for US inflation figures and a European Central Bank meeting on Thursday for clues about the pace of monetary tightening, something that could knock equity and commodities prices.

Benchmark copper on the London Metal Exchange (LME) was down 0.6% at $9,904.50 a tonne in official trading, off a record high of $10,747.50 reached on May 10.

Prices are still up nearly 30% this year.

ING analyst Wenyu Yao said talk of the Chinese government controlling commodity price rallies could sap some speculative energy from the market, but was unlikely to meaningfully affect prices.

"The market is in consolidation mode," she said, adding that infrastructure building in the United States and China should support demand. "The downside (for prices) is shallow this year. The upside is bigger."

CHINA PREMIUMS: Chinese Yangshan copper import premiums fell to $26, the lowest in at least 9 years, pointing to weak demand for overseas metal.

POSITIONING: Speculators are scaling back bets on higher copper prices, with their net long on the LME falling to 20% of open contracts by Monday, brokers Marex Spectron said.

STRIKE: Workers at BHP Group's Spence copper mine in Chile said they would extend negotiations with the company for a few more days to try to avoid a strike.

ALUMINIUM: LME aluminium was down 0.2% at $2,448.50 a tonne. The cash contract flipped to a premium against three-month metal from a $30 discount two weeks ago, suggesting tighter supply of quickly deliverable material.

TIN: Tin prices were up 0.1% at $31,240 after reaching a 10-year high on Tuesday. Malaysia Smelting Corporation (MSC), a producer, said it had suspended operations and declared force majeure on deliveries.

OTHER METALS: LME zinc was flat at $3,017 a tonne, nickel was up 1% at $18,117 and lead rose 0.5% to $2,195.