LONDON: Copper prices eased on Wednesday, weighed down by a rebound in the dollar, worries about a lack of major stimulus and weak demand in the world’s top metals consumer China combined with strong domestic output.
Three-month copper on the London Metal Exchange was down 0.6% to $8,422 per metric tonne by 1600 GMT, extending losses from Tuesday.
“Investors are overwhelmingly looking towards China’s expected stimulus packages, but that could disappoint, which is a concern weighing on metals prices at the moment,” said Edward Gardner, a commodities economist at Capital Economics.
“It’s quite downbeat really - weak global demand for many of these metals at the moment and the slowdown in China’s economy combined with decent supply.” LME copper prices are expected to rise slightly by the end of this year to $8,500 a metric tonne, Gardner added.
The dollar index bounced on Wednesday, making commodities priced in the US currency more expensive for buyers using other currencies.
Demand from China’s power sector, the main consumer of copper, is expected to grow more slowly in the second half of this year, after a healthy gain in the second quarter, according to CITIC Futures.
Chinese consumption will likely grow 3.9% this year, while refined copper production in China will rise 8% with new projects coming online, it added.
Data showed on Wednesday that China’s refined copper production in June jumped 13.6% on a year-on-year basis to another record high.
Higher global prices amid tight overseas inventories have subdued import appetite, pushing down the Yangshan copper import premium to $42 a metric tonne on Tuesday, down 21.5% from a 2023 high hit two weeks ago.
LME zinc dropped 1.4% to $2,361 a metric tonne after LME inventories surged, having shot up 30% in two days to 90,825 metric tonnes, the highest in 14 months.
“We see further price pressure from a rising refined zinc surplus ... as smelter output growth outpaces sustained demand weakness,” Citi analysts said in a note, adding that prices were expected to touch $2,200 in three months.
LME aluminium slipped 0.5% to $2,192 a metric tonne, lead dipped 0.3% to $2,089.50, tin eased 1.4% to $28,150 while nickel shed 0.9% to $20,900.
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