Copper declines

Copper fell on Thursday as price charts suggested a pause a day after the metal's rally to a three-week high on expectations of rising demand from top importer China following strong trade numbers. Benchmark copper on the London Metal Exchange (LME) was last bid at $7,354 at the close, down from ending at $7,419 in the previous session, when it hit its highest since April 12 at $7,480.
Better-than-expected Chinese trade data as well as a rise in Germany's industrial output and upbeat US payroll figure triggered a short-covering rally this week. "In general short positions on copper are still pretty big, so my feeling is that there are still some legs on the upside for copper. I wouldn't be surprised to see the short-covering take copper certainly past $7,500 and possibly to $7,700," analyst Gayle Berry at Barclays said.
"Fundamentals have been getting a bit better, even though the macro sentiment is still pretty weak. Stocks have been falling, physical premiums have been going up and activity at some of the end-users in China looks a bit better." Stocks of copper in LME-registered warehouses fell by 75 tonnes to 605,750 tonnes, daily data issued on Thursday showed. They have been declining in the past two weeks following a steep increase in the previous six months.
Rio Tinto said it could gain Mongolian approval to ship copper from its huge Oyu Tolgoi mine earlier than expected, adding to concerns about oversupply. "Oyu Tolgoi running ahead of schedule shows that mine supply is improving, so you do have a more well-defined surplus in the second half of the year, which will put pressure on prices again," Berry said.
Also weighing on copper, China's imports of the metal fell 7.4 percent in April from a month before to hit a 22-month low, data showed on Wednesday. Analysts and traders said Thursday's weakness in copper was due to technical factors. "After the rally the price is too stretched. There is too big a gap between the 13-day moving average ($7,520.27), which is a reference for the short-term trend, and the 30-day moving average ($7,628)," T-Commodity consultant Gianclaudio Torlizzi said. "Until that gap closes there is a downward risk for copper prices."
Higher consumer inflation in China could also be pressuring prices. China's annual consumer inflation quickened to 2.4 percent in April from March's 2.1 percent due to higher food costs. Aluminium ended at $1,891, from $1,908 at the close on Wednesday, while zinc closed at $1,872 from $1,894. Lead ended at $2,017 from $2,064 and tin closed at $20,725 from $20,745. Nickel closed at $15,285 from $15,405 at the close on Wednesday.