Copper prices hit their weakest in more than two months on Thursday as more bullish positions were scrapped, inventories kept rising and demand remained lacklustre in top metals consumer China.
Three-month copper on the London Metal Exchange was down 0.4% at USD 9,506.50 a metric ton by 1605 GMT after hitting an intra-day low of USD 9,485.50, its weakest since April 17.
Earlier the metal, mainly used in the power and construction industries, got a temporary boost from a weaker dollar index after U.S. weekly jobless claims data were released, making commodities priced in the U.S. currency less expensive for buyers using other currencies.
Meanwhile, copper stocks registered with the world’s big three exchanges have risen above 500,000 tons for the first time since August 2021.
LME inventories have surged by 72% since mid-May to 177,750 tons, the highest in more than six months.
“The rise in total exchange copper stocks to over 500,000 tons is not something the market likes when it’s already under pressure from long liquidation,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“The question is how deep can this correction go. The area just below USD 9,500 is an important technical level and if we continue lower from there, then we’re potentially looking at USD 9,100 next,” he added.
After rallying to a record high of USD 11,104.50 on May 20, copper prices have fallen 14%, partly on sluggish economic data from China.
Adding to worries about weak physical copper demand in the country was data on Thursday showing China’s industrial profit growth slowed sharply last month.
Low local premiums and rising inventories in China argue against fundamental copper market tightness, TD Securities analysts said in a note.
“While the fundamental situation certainly looks promising in the years to come, the lack of evidence supporting current physical tightness has started to see the money manager positioning unwind,” TD Securities said.
In other metals, LME aluminium eased 0.8% to USD 2,492.50, zinc shed 0.5% to USD 2,925 and lead dropped 0.6% to USD 2,181.
Nickel edged up 0.1% to USD 17,075 and tin gained 0.7% to USD 32,225.
