Copper hits two-week low

LONDON: Copper prices retreated to a two-week low on Wednesday as investors awaited further detail on plans by Chinese smelters to cut production.

Three-month copper on the London Metal Exchange (LME) was down 0.7% at $8,804 a metric ton in official rings. It dipped to $8,776 earlier in the session for its lowest since March 13.

LME copper soared to an 11-month high of $9,164.50 on March 18 after top Chinese smelters announced plans for joint production cuts but did not provide detail of the extent or timing of any suspensions. “The copper rally after Chinese smelters’ plans to cut was slightly overbought,” said Dan Smith, head of research at Amalgamated Metal Trading.

The smelters will have another meeting on Thursday March 28 on plans to bring forward maintenances and reduce loss-making capacity in the face of a shortage of copper concentrates, industry sources said. Adding to the uncertainty about smelter cuts, a state-backed research house said copper output from China was expected to grow by 3% this year.

Also dampening enthusiasm among speculators was a strong seasonal build-up of copper inventory in China.

The discount on the LME cash copper contract against the three-month contract remained close to a record high, signalling expectations of rising supply. Copper was not far from its fair value, still supported by strong long-term fundamentals, raising the prospect of further upside this year, Smith added, citing data showing higher Chinese industrial profits.

“Funds are coming back to commodities as a general idea, which always kind of helps. Prices and volumes of gold and bitcoin nearing record highs are general signs of more money around looking for opportunities,” he added.

Among other metals, three-month zinc hit its lowest price in nearly four weeks as weak steel demand weighed on the market. Zinc, mainly used for galvanising steel, was down 1.1% at $2,415.5 a ton after touching $2,409 for its weakest since March 1.

Aluminium declined 0.8% to $2,286 a ton, nickel edged down 0.6% to $16,540, lead lost 0.8% to $2,004 and tin was down 0.4% at $27,350.