LONDON: Copper prices fell on Thursday, with wider markets in a cautious mood as reports of artillery fire in east Ukraine heightened fears of a conflict between Russia and Ukraine.
Stock markets fell, bond prices rose and the dollar strengthened slightly, making metals costlier for buyers outside the United States.
Benchmark copper on the London Metal Exchange (LME) was down 0.7% at $9,927.50 a tonne at 1704 GMT, having earlier fallen as much as 1.7%.
Copper reached a record high of $10,747.50 a tonne in May but has since bumbled along between around $9,000 and $10,000 as the economy of China, the largest metals consumer, slowed.
Prices are still too high and will likely fall in the coming weeks or months as copper supply increases, said Commerzbank analyst Daniel Briesemann, adding that the decline would soon reverse.
“Demand prospects are excellent in the longer term,” he said.
UKRAINE: US President Joe Biden said there was now every indication Russia planned to invade Ukraine, including signs Moscow was carrying out a false flag operation to justify it, after Ukrainian forces and pro-Moscow rebels traded fire.
Russia is a major producer of aluminium and nickel.
CHINA: Demand in China has fallen during Chinese New Year and the Olympics, when some industrial output was restricted.
Yangshan copper import premiums fell to $38 a tonne from $140 in October last year and stockpiles in Shanghai Futures Exchange warehouses have risen to 106,572 tonnes from 40,359 tonnes in late January.
“A large section of the Chinese trading community remain in absentia,” said brokers Marex.
PBOC: Data on Wednesday showed China’s factory-gate inflation and consumer price growth softened, potentially leaving more room for the People’s Bank of China to ease policy to support the economy.
COLUMN: LME warehousers are slashing capacity as metal stocks drain away, said Reuters columnist Andy Home.
METALS PRICES: LME aluminium was up 0.2% at $3,261.50 a tonne, zinc rose 0.7% to $3,609, nickel climbed 2.1% to $23,885, lead was 0.5% higher at $2,350.50 and tin was up 0.5% at $43,900.