LONDON: Copper prices slipped on Friday on concern over surplus supplies and sluggish demand in leading metals consumer China, where the currency is also weakening.
Three-month copper on the London Metal Exchange fell 1.5% to $9,709 a metric ton by 1600 GMT after three days of gains.
The metal used in power and construction has shed 13% since touching a record peak above $11,100 last month. US Comex copper futures dropped 2.3% to $4.46 a lb.
“The market has been trying to figure out whether the correction phase is coming to an end, but I think it’s still too early to call a turnaround,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “We need data, especially Chinese data, to be more supportive.” China’s yuan dipped to a seven-month low against the dollar on Friday, hurt by portfolio outflows from mainland financial markets and speculation that the central bank is allowing the currency to weaken gradually. A weaker yuan usually weighs on industrial metals because it makes commodities priced in the dollar more expensive for buyers in China. But Hansen said the impact could be offset because it may have also spurred some stockpiling. Brokers in Asia said the drop in copper prices encouraged more physical purchases this week and provided support around $9,500 to $9,600 a ton.
An overhang of metals has weighed on the copper market, with SHFE copper stocks up tenfold since the start of the year to 322,910 tons, reflecting the abundant supply in China. Data showed the global refined copper market had a surplus of 13,000 tons in April and excess supply of 299,000 tons in the first four months of the year. In other metals, LME aluminium dipped 0.2% to $2,516 a ton, nickel fell 1% to $17,255, zinc shed 0.5% to $2,860.50, lead dropped 1% to $2,194 and tin eased 0.9% to $32,785.
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