Shanghai copper fell almost 2 percent on Tuesday as investors cashed in positions after London futures failed to sustain a rally above $7,600 a tonne in the previous session. The most-active September copper contract on the Shanghai Futures Exchange fell to 64,200 yuan ($8,422) a tonne, from 65,400 yuan on Monday.
"The market is disappointed with the failure to maintain the rally in London and investors are adjusting their expectations," said analyst Wang Zheng at constancy Faber Metals.
He added: "The global macroeconomic situation is putting a lot of pressure on copper prices. A slowdown in US growth and long-awaited cooling measures in China are weighing on sentiment." Copper for delivery in three months on the London Metal Exchange fell $75 to $7,465 a tonne. Copper rallied 2.6 percent on Monday to touch $7,696 in electronic trading, its highest since mid-May.
"This $7,600 level was a key point and the fact we couldn't pull away from it was disappointing," Man Financial analyst Edward Emir said. "In the longer term, we are looking for prices to hold at current levels for the rest of the year and to fall by 10 to 15 percent in 2008," he added. A crop of strike threats in North and South America underpinned prices, focusing attention on falling stockpiles in LME warehouses, which now stand at 116,600 tonnes. Inventories are equivalent to just over four days of world consumption, having fallen 45 percent from a three-year high in February.
Managers at the Canadian Copper Refinery in Montreal are trying to ramp up production to around 35 percent of capacity after a strike forced the owner, Anglo-Swiss company Strata Plc, to declare force major at the plant which produced around 300,000 tonnes of copper last year.
Strata said no meetings were planned to resolve the dispute. In Chile, contract talks at Collahuasi, one of the world's largest copper mines, stalled on Friday with time running out for the mine and union workers to reach a deal.
And in Peru, workers at Southern Copper's two copper mines and a smelter will go on strike June 23. LME aluminium was up $3 at $2,708, after shedding 1.6 percent on Monday.
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