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Copper extends decline as record prices puts off buyers in China

Tan KW
Publish date: Thu, 23 May 2024, 07:41 PM
Tan KW
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Copper fell for a third day as Chinese factories balked at paying record prices. Hawkish comments from Federal Reserve officials also pressured base metals.

Prices have dropped about 7% from Monday’s record as a surge in bullish bets put pressure on holders of short positions to close out their trades. Copper had its biggest intraday drop in nearly two years on Wednesday amid profit-taking by bullish investors and new signs of weaker demand in China. 

Factories in the world’s biggest metals consumer are struggling to pass on the surging costs of copper to clients making products ranging from air-conditioners to home electronics. 

In the US, minutes from the May Federal Open Market Committee (FOMC) meeting showed concern over “disappointing” price increases. The central bank may hold rates higher for longer “should inflation not show signs of moving sustainably towards” its 2% target. That could put a dampener on global economic growth. 

The record rally for copper was “showing signs of easing,” Jinrui Futures Co said in a note. Still, China’s vow to step up stimulus along with expectations supplies will tighten may support elevated prices in the near term, the firm said.

Copper fell 0.8% to US$10,339.50 a tonne on the London Metal Exchange as of 11.12am local time. Other metals including aluminium and nickel were more than 1% lower. 

Meanwhile, iron ore declined 2.1% to US$119.90 a tonne, on track for its first daily decline after five consecutive gains. Futures in Dalian fell, along with steel prices in Shanghai.
 

 


  - Bloomberg

 

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