LONDON: Copper prices fell on Thursday as a short squeeze on the London Metal Exchange (LME) eased and attention refocused on the threat of slowing demand in top consumer China.
Benchmark LME copper was down 2.6% at $9,926 a tonne at 1105 GMT and the premium for cash copper over the three-month contract had reduced to $267.50 a tonne.
The premium for quickly delivered cash copper had surged to $1,103 on Monday -- by far the biggest on record -- as available stockpiles in LME-registered warehouses shrank to their lowest level in at least two decades.
The squeeze pushed the benchmark copper price up 10% last week and to $10,452.50 on Monday, just shy of record highs.
Exchange stocks represent a fraction of available material and sudden tightness on the LME does not reflect the wider market, said Julius Baer analyst Carsten Menke.
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"We are seeing a loosening in the copper market," he said, pointing to rising mine and scrap supply and slowing demand in China, which is suffering power shortages and weakening economic growth.
"Prices should be lower at the end of the year," he said.
Stocks/Spread: On-warrant copper stocks in LME-registered warehouses at 18,250 tonnes remain near multi-decade lows.
China Premiums: Yangshan copper import premiums fell to $95 a tonne from $140 on Oct. 12, suggesting weaker Chinese demand for overseas metal.
China Coal: Chinese thermal coal futures slumped for a second day after the government said it could intervene to control a record-breaking price rally.
China Construction: Officials sought to reassure investors that a debt crisis in China's property market won't damage the wider economy.
Smelter: Shandong Fangyuan Nonferrous Metals Group has fired up its 300,000 tonnes per year refined copper production line after a long shutdown, sources said.
Nickel: Benchmark nickel was down 3% at $20,340 a tonne after touching $21,425, the highest since 2014.
Exchange inventories of nickel are falling, premiums for quickly deliverable metal are rising and an industry group said bad weather could reduce output of nickel ore in the Philippines.
Other Metals: LME aluminium was down 2.1% at $3,006 a tonne, zinc fell 0.1% to $3,558.50, lead slipped 1% to $2,392.50 and tin was down 1.2% at $37,770.