Copper slides from peak as Chinese buying eases

Copper and most other industrial metals retreated on Wednesday from recent peaks as copper demand in China faltered and as some investors regarded the sector's strong gains as outpacing supply and demand fundamentals. The index of six base metals traded on the London Metal Exchange had rallied 13 percent from lows in mid-March until Tuesday, when zinc hit its highest price in eight months and copper its strongest since mid-December.
"I do think in general they've moved a bit too far too soon. The sector is overdue a correction," said Stephen Briggs, metals strategist at BNP Paribas in London. Three-month LME copper closed down 1.4 percent at $6,390 a tonne after scaling its highest level since December 15 at $6,481 a tonne in the previous session. Traders said buyers of refined copper in top metals consumer China have reduced spot purchases this week after domestic prices rose and in a slowing economy local demand is not expected to increase strongly in the near term.
"I'm still in the camp that says copper's in surplus this year ... I would expect to see copper back down to $6,000 at some point if not below, but whether or not this is the start of a correction is impossible to tell," Briggs said. More losses were likely due to signals based on chart patterns, analyst Edward Meir at broker INTL FCStone said in a note.
"The case for further selling over the near term also looks likely technically in view of the fact that four of the six base metals we follow (copper, aluminium, zinc and lead) are now in extremely overbought territory." Aluminium failed to trade in closing rings and was last bid down 2.7 percent at $1,921 a tonne after touching a near five-month peak on Tuesday.
Tin was the only metal to stay in positive territory after data showed refined tin shipments from top exporter Indonesia fell 27 percent in April from a month ago, the lowest since November. LME tin, also untraded in rings, was last bid up 0.3 percent at $16,150 a tonne. "Things are looking a bit better for tin. The data shows that Indonesian exports really are coming down and LME stocks are very low," said Briggs. Zinc shed 1.3 percent to end at $2,368 a tonne while nickel dropped 2.3 percent to $13,975 and lead, untraded in rings, was bid down 3.6 percent at $2,082.