London copper fell on Monday, after a slowdown in Chinese lending in May, illustrating the efficacy of Beijing's monetary tightening and accompanying risks to demand. The most-active August copper contract on the Shanghai Futures Exchange fell 0.6 percent to 67,190 yuan per tonne, chasing the previous session's losses on the LME of more than 1 percent, but maintaining the premium for benchmark London copper versus Shanghai around 600 yuan.
Prompt prices in Shanghai held their premium to the third month - currently around 1,100 yuan, potentially encouraging some metal to enter China from the international market after disappointing imports in May. "The continued backwardation in SHFE copper shows that investors are buying copper for prompt delivery but are wary about taking long positions," said Shanghai CIFCO Futures analyst Zhou Jie.
"The August contract price is falling as people are still anticipating an interest rate hike in China in the near term," he added. Lending some support to copper prices was the continued supply disruption at Chile's El Teniente mine. Output at the world's No 5 copper deposit remained well below capacity on Sunday, as staffing was limited by renewed violence from striking contractors, mine owner Codelco said. London lead prices fell 1 percent and the Shanghai equivalent also lost ground after news that lead pollution in eastern China seriously poisoned 103 children and affected hundreds of other residents.