LONDON: Copper hit a one-week high on Tuesday as speculators followed short-term bullish signals, but later pulled back on weak factory activity in top metals consumer China and uncertainty about US interest rates.
Three-month copper on the London Metal Exchange (LME) fell 0.9% to $8,520 a tonne by 1640 GMT after touching $8,770.15 for its strongest level since April 25.
US Comex copper futures dropped 1.8% to $3.86 a lb.
Trading volume was thin, with the Shanghai Futures Exchange shut for a national holiday.
LME copper last week touched its lowest level in nearly four months before rebounding.
“The bounce from support was significant, so if you’re trading it you’re looking to try to get back toward $9,000, but the chances are that rally will fail,” said Dan Smith, head of research at Amalgamated Metal Trading.
“I’m bullish for the year, I think we’ll be in a down draft for the next couple of weeks. It’s partly because of seasonality, but also because of the ramp-up of copper concentrate in some of the key places like Peru and DRC.” Also weighing on the market was data showing China’s manufacturing activity shrank unexpectedly in April, raising pressure on policymakers seeking to boost an economy struggling for post-COVID lift-off.
“We believe that the government will resume subsidies on electric vehicles, which would benefit both the manufacturing and services sectors. The government might also push infrastructure construction faster,” ING economists said in a note.
The market was also nervous about whether the US Federal Reserve will indicate this week that it expects a pause in interest rate hikes after a widely expected increase of 25 basis points.
In other metals, LME zinc dropped 1.6% to $2,605 a tonne, while aluminium added 0.2% to $2,361, nickel advanced 3.1% to $24,980, lead gained 0.6% to $2,160.50 and tin climbed 1.4% to $26,075.
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