Copper slips as China inflation clouds economic growth outlook

Copper prices dipped on Wednesday as rising inflation clouded the economic growth outlook for China, the world's biggest consumer of the metal.

Three-month copper on the London Metal Exchange fell 0.1% to $9,548.50 a tonne by 0532 GMT, while the most-traded December copper contract on the Shanghai Futures Exchange declined 0.7% to 69,990 yuan ($10,939.36) a tonne.

China's factory gate prices rose at the fastest pace in 26 years in October, as coal prices soared amid a power crunch, further squeezing profit margins for producers and heightening stagflation concerns.

Consumer price rises also quickened, but at a slower pace.

"It seems that producers are finally able to transfer more of the costs to end-users, but that also means that the Chinese government has less ammunition to keep growth steady," said commodities broker Anna Stablum of Marex Spectron.

"(And) you have a second thing impacting the markets and that is the property sector slowdown," Stablum added, referring to the debt crisis in China's real estate sector.

Copper is often used as a gauge of global economic health due to its wide usage in many industries including real estate.

FUNDAMENTALS

• LME aluminium rose 0.1% to $2,559.50 a tonne, while ShFE aluminium dropped 1.9% to 18,680 yuan a tonne and ShFE nickel shed 0.8% to 143,390 yuan a tonne.

• On-warrant LME aluminium stocks fell to their lowest since December 2005 at 599,925 tonnes, with most metals leaving from warehouses in Malaysia.

• One party controls more than 90% of available LME lead stocks and short-term futures, and LME cash has been in premium over the three-month contract since Sept. 22, indicating tight nearby supplies.

• China's October copper cathode output from major smelters fell 2.2% month-on-month due to power curbs and supply chain disruptions, but with smelter maintenance gradually easing and power supplies recovering, November output is likely to rise to around 780,000 tonnes, research house Antaike said.

• Protesters in Peru's Cotabambas province on Tuesday blocked once again a key mining corridor used by MMG Ltd's Las Bambas copper mine, a community leader said.