Copper hits 7-week low as funds, traders cut long positions

LONDON: Copper prices slid to seven-week lows on Tuesday as traders and funds cut bets on higher prices due to growing nervousness that top consumer China would soon move to curb further price rises.

Benchmark copper on the London Metal Exchange was down 3.9 per cent at $9,587 a tonne in official trading. Prices of the metal used in the power and construction industries have dropped more than 8 per cent since touching a record high at $10,747.50 on May 10.

“We are in a soft patch,” said Citi analyst Oliver Nugent.

“The next leg of the rally will be led by the physical market around the third quarter when the whole supply chain has used up its stocks.”

SELL-OFF: The sell-off started overnight as Chinese traders came back from a long weekend. Copper prices falling below the 50-day moving average around $9,781 accelerated the sell-off.

CURBS: China’s state planner last week renewed its pledge to step up monitoring of commodity prices, as domestic producer inflation hit its highest in more than 12 years.

Shanghai Metal Exchange Market (SHMET) and Chinese analysts said China plans to release state reserves of nonferrous metals copper, aluminium and zinc in a programme set to last until the end of 2021.

SPREADS: The premium for June aluminium contract over the July contract jumped to $27 a tonne at the close on Monday.

This is because a large amount of aluminium may have to be delivered to one company holding between 30-39 per cent of open interest for the June contract which expires on Wednesday.

OTHER METALS: Aluminium was down 1.8 per cent at $2,449.50 a tonne, zinc fell 1.4 per cent to $3,002, lead slipped 1.2 per cent to $2,185, tin dropped 1.4 per cent to $31,217 and nickel ceded 2.9 per cent to $17,938.

TIN: Shortages of the soldering metal due to an extension of the lockdown to June 28 in major producer Malaysia are expected to support tin prices which on Monday hit $33,181 the highest in more than a decade.

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