LONDON: Copper prices slid to seven-week lows on Tuesday as traders and funds cut bets on higher prices due to growing nervousness that top consumer China would soon move to curb further price rises.
Benchmark copper on the London Metal Exchange was down 4.3% at $9,540 a tonne at 1609 GMT. Prices of the metal used in the power and construction industries have dropped more than 8% since touching a record high at $10,747.50 on May 10.
“We are in a soft patch,” said Citi analyst Oliver Nugent.
“The next leg of the rally will be led by the physical market around the third quarter when the whole supply chain will probably have used up its stocks.”
The sell-off started overnight as Chinese traders came back from a long weekend. Copper prices falling below the 50-day moving average around $9,781 accelerated the sell-off.
China’s state planner last week renewed its pledge to step up monitoring of commodity prices, as domestic producer inflation hit its highest in more than 12 years.
Shanghai Metal Exchange Market (SHMET) and Chinese analysts said China plans to release state reserves of nonferrous metals copper, aluminium and zinc in a programme set to last until the end of 2021.
The premium for June aluminium contract over the July contract jumped to $27 a tonne at the close on Monday.
This is because a large amount of aluminium may have to be delivered to one company holding more than 40% of open interest for the June contract which expires on Wednesday.
Aluminium was down 1.6% at $2,455 a tonne, zinc fell 0.9% to $3,018, lead slipped 1.4% to $2,177, tin dropped 1.1% to $31,305 and nickel ceded 4.4% to $17,665.
Shortages of the soldering metal due to an extension of the lockdown to June 28 in major producer Malaysia are expected to support tin prices which on Monday hit $33,181 the highest in more than a decade.
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