Copper falls on China's pledge to cool metals prices

LONDON: Copper prices fell on Thursday as top metals consumer China stepped up efforts to curb surging prices for base metals which have raised input costs for manufacturers.

Benchmark three-month copper on the London Metal Exchange (LME) eased 1.5% to $9,832 per tonne by 1030 GMT, close to its lowest since late April.

China's state planner on Wednesday renewed its pledge to step up monitoring of commodity prices and strengthen supervision of spot and futures markets, as producer price inflation hit its highest in more than 12 years.

Gianclaudio Torlizzi, partner at consultancy T-Commodity, said the market was concerned about pledges by the Chinese government to cool prices, which could see levels fall even lower.

"I don't see reason to be bullish as the short term fundamentals are not so sound," he said, citing low Chinese copper premiums which indicate slow demand and the persistent discount of LME's cash copper contract over the three-month price.

The market was also on the lookout for US inflation data for clues on whether the Federal Reserve would start tapering stimulus, a move which could hit commodity prices, Torlizzi said.

INVENTORIES: Copper inventories climbed 2,100 tonnes to a one-month high of 131,775 tonnes- with canceled warrants, stocks earmarked for delivery, at their lowest since March.

SPREADS: LME copper remained in a contango for about a month, which reflects expectations for oversupply. The discount of LME cash copper to the three-month contract was at $25.75 a tonne.

ALUMINIUM: China is looking to release 800,000-900,000 tonnes of primary aluminium from its state reserves as soon as next month to ease high prices for the metal, consultancy CRU said in a note to clients, citing local market contacts.

OTHER METALS: LME aluminium shed 0.5% to $2,448 a tonne, zinc lost 1% to $2,988.50, lead gave up 0.8% to $2,181 and tin fell 0.3% at $31,115 while nickel climbed down 1.5% to $17,870.