Copper falls from two-week highs as factory activity slows

LONDON: Copper prices fell sharply on Wednesday after data showed that factory activity slowed in August across swathes of Asia and Europe.

In China, by far the biggest metals consumer, manufacturing contracted for the first time in nearly 1-1/2 years.

Benchmark copper on the London Metal Exchange (LME) was down 1.9% at $9,339.50 a tonne at 1601 GMT. However, prices are still up 20% this year after rising 26% in 2020, with analysts optimistic that demand for the metal used in power grids will increase as the world ditches fossil fuels for electrification.

Copper reached a record high of $10,747.50 in May and a 4-1/2 month low of $8,740 in mid-August.

Fundamentals have improved in recent weeks, said Citi analyst Oliver Nugent, pointing to falling exchange stockpiles, higher Chinese import premiums, lower speculative positioning and expectations for more economic stimulus.

China is battling with aluminium’s decarbonisation paradox, writes Reuters columnist Andy Home.

Benchmark LME aluminium was down 1.1% at $2,688.50 a tonne, zinc dropped 0.7% to $2,981.50, nickel fell 1.2% to $19,320 and tin was down 1.3% at $33,465.