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LONDON: Copper prices in London hit their lowest in seven weeks on Tuesday under pressure from a weaker yuan, which reduced the purchasing power of top metals consumer China, and rising inventories.

Three-month copper on the London Metal Exchange (LME) fell 2% to $9,706 per metric ton by 1004 GMT after hitting $9,691, the lowest since April 23.

“Base metals prices continue to come under pressure after having rallied sharply through May,” Standard Chartered analyst Sudakshina Unnikrishnan said.

Copper, used in power and construction, touched a record high of $11,104.5 on May 20.

“While copper benefits from a supportive medium- to longer-term market backdrop characterised by rising demand from the clean energy and renewable sectors and concerns over mine-supply growth, current demand indicators continue to look soft,” Unnikrishnan said.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange (SHFE) are at more than four-year highs and copper spot premiums in China remain weak with the Yangshan import premium in negative territory.

China’s yuan fell against the U.S. dollar to its lowest in nearly seven months, as investors returned from a long weekend break to play catch-up with broad greenback strength in overseas markets.

Copper recovers from five-week lows with fundamentals in focus

“There was an expectation that there would be buying when SHFE reopened after the Chinese holiday. When there was no continuation of yesterday’s rally, it looks like a bit of long liquidation came into the market,” a trader said.

On the LME, the near-term market structure does not point to any imminent shortages, with cash to three-month spreads for the entire base metals complex firmly in discounts, known as contango.

Adding further pressure on the market, daily LME data showed on Tuesday that total copper stocks in the LME-registered warehouses rose after 2,200 tons of inflows to 127,325 tons, the strongest in more then three months.

LME aluminium eased 1.6% to $2,531 a ton after hitting $2,529, its lowest since May 14, under pressure from recent twofold growth in stocks in the LME system.

Zinc fell 2.4% to $2,782, lead dropped 1.3% to $2,178, tin edged down 0.2% at $31,935, and nickel declined 0.5% to $17,810.

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