Copper hits one-week low on profit-taking and China demand concerns

BEIJING: Copper prices hit a one-week low on Friday on profit-taking after a rally led by speculative funds while demand from physical buyers in China was muted.

Benchmark three-month copper on the London Metal Exchange was down 1.2% at $12,955 a metric ton by 1100 GMT after hitting $12,774.5 for its lowest since January 9.

The metal used widely in power and construction is down 5% since a record high of $13,407 on Wednesday. The securities regulator in top metals consumer China, meanwhile, vowed on Friday to crack down on excessive speculation after the country’s benchmark stock index approached nearly 10-year highs this week.

The most traded copper contract on the Shanghai Futures Exchange closed daytime trade down 2.3% at 100,770 yuan ($14,461.20) a ton.

“Metals have been under pressure this week at various points during the Shanghai day session as China reduced risk and authorities there try to cap the recent retail ‘frenzy’,” said Marex metals strategist Alastair Munro.

Signalling that high prices have suppressed China’s appetite for the metal, the Yangshan copper premium fell 16% on Friday to $32 a ton for its lowest since December 1. Copper inventories in ShFE-monitored warehouses rose 18% this week to 213,515 tons, their highest since April, while aluminium, lead and tin inventories also registered heavy inflows.

Copper prices have gained 20% over the past two months on worries about tightening availability of the metal owing to mine supply disruptions and stock flows to the U.S. ahead of potential tariffs.

From a technical standpoint, the nearest support level for LME copper is coming from the 21-day moving average at $12,537.

Among other LME metals, aluminium fell 1% to $3,136 a ton, zinc lost 1.9% to $3,253, lead shed 1.5% to $2,068.50 and tin slid 3.5% to $49,795 while nickel dropped 2.5% to $18,110.