Copper dips on economic worries, rising inventories
- LME copper stocks surged by nearly 30,000 tonnes to 165,600, data showed on Wednesday, and have more than doubled over the past week.
LONDON: Copper prices slipped on Wednesday as surging inventories highlighted the prospect of excess supply amid worries about the impact of rising COVID-19 cases on the global economy.
Losses were modest, however, after China's factory activity extended solid growth in September, underlining a steady economic recovery from the coronavirus shock.
"The data overnight shows China is clearly improving, but at the same time so has the data in terms of available copper stocks over the past few days," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"That tightness was a key fundamental support that helped the market rally, but that seems to have evaporated within just a few days. Copper is likely to struggle, at least in the short term, and faces the risk of a deeper correction."
Three-month copper on the London Metal Exchange was down 0.1pc at $6,573 a tonne by 0945 GMT, having risen as much as 0.9pc earlier in the session.
It is set for the first monthly loss since March.
Looking at chart levels, LME copper is vulnerable because it has broken the uptrend that had been in place since March and faces resistance at $6,650, Hansen added.
The most-traded November copper contract on the Shanghai Futures Exchange closed down 0.2pc at 50,930 yuan ($7,482.66) a tonne. Chinese markets will be closed Oct. 1-8 for the Golden Week holiday.
LME copper stocks surged by nearly 30,000 tonnes to 165,600, data showed on Wednesday, and have more than doubled over the past week.
Also weighing on the market was a stronger US dollar, which makes greenback-priced metals more expensive to buyers using other currencies.
Nickel smelting park PT Indonesia Weda Bay Industrial Park expects next year to double its current capacity of 110,000 tonnes of nickel content per year.
LME aluminium fell 0.9pc to $1,767.50 a tonne, zinc declined 1.1pc to $2,398.50, lead shed 1.2pc to $1,822, nickel lost 0.8pc to $14,340 and tin added 0.1pc to $17,450.
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