Copper falls on China's pledge to cool prices, low premiums

LONDON: Copper prices fell on Thursday on signs of sluggish demand for the red metal from top metals consumer China and the country's efforts to curb surging prices for base metals.

Benchmark three-month copper on the London Metal Exchange (LME) eased 1.5% to $9,834.50 per tonne in official trading, close to its lowest since late April.

Low Chinese copper premiums and the persistent discount of LME's cash copper contract over the three-month price point to softer demand for now, said Gianclaudio Torlizzi, partner at consultancy T-Commodity.

"I don't see reason to be bullish as the short term fundamentals are not so sound," he said.

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.

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.

DEMAND: The Yangshan copper premium fell to $22 a tonne, its lowest since February 2016 and down 77% from May 2020, indicating weak demand for imported metal into China.

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.

INFLATION: Inflation in the United States accelerated in May, but this will have no impact on monetary policy as Federal Reserve Chair Jerome Powell has repeatedly stated that higher inflation will be transitory.

OTHER METALS: LME aluminium shed 0.5% to $2,447.50 a tonne, zinc lost 1.1% to $2,986.50, lead gave up 0.9% to $2,180 and tin fell 0.2% at $31,110 while nickel climbed down 1.8% to $17,818.