LONDON: Copper prices held above seven-week lows on Wednesday as arbitrage buying offered support while zinc dropped to its weakest in two months after a surge in inventories.
Three-month copper on the London Metal Exchange (LME) was down 0.3% at $8,174.45 per tonne by 1630 GMT, bouncing after re-testing the seven-week low of $8,148.50 touched in the previous session.
US Comex copper futures dropped 0.2% to $3.66 a lb.
LME copper has shed nearly 8% since hitting its strongest in more than a month at the start of August, with investors discouraged by the lack of strong stimulus in top metals consumer China.
“The biggest weight on the market right now is the huge disappointment in Chinese data,” said WisdomTree commodities strategist Nitesh Shah.
“With today’s home sales data looking weak, there are increasing signs that commodity intensive sectors are vulnerable.” Data on Wednesday showed China’s new home prices fell for the first time this year in July, the latest downbeat data pointing to a rapid loss in broader economic momentum.
“We are making up to 200 yuan losses per tonne we sell currently. And if the property woes continue and are exacerbated, we might see demand fall lower in the following months,” said a copper rod producer in China.
The most-traded September copper contract on the Shanghai Futures Exchange (SHFE) ended day-time trade 1.1% down at a five-week low of 67,550 yuan ($9,258.88) a tonne.
Arbitrage activity supported LME copper as traders sold SHFE futures and bought on the LME, broker Marex said in a note.
Zinc was the biggest loser on the LME, dropping 0.8% to $2,295 a tonne after hitting a two-month low of $2,265.50.
Prices slumped after data showed zinc inventories in LME-registered warehouses have surged by 54% over two days to their highest in 17 months, highlighting a market surplus amid weak demand.
LME aluminium added 0.1% to $2,145.50 a tonne after prices hit a five-week low of $2,130, as consumer buying partly helped offset speculator selling over worries about a glut of the metal.
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