London copper eases on high inventory pressure

Copper prices eased in London on Monday on rising inventories, but physical demand in China has been picking up and will likely continue to gain should prices stay relatively stable.

Three-month copper on the London Metal Exchange (LME) fell 0.5% to $9,555 per metric ton by 0744 GMT, while the most-traded August copper contract on the Shanghai Futures Exchange (SHFE) ended down 0.1% at 78,060 yuan ($10,740.23) a ton.

Inventories of copper in LME-approved warehouses climbed to 180,125 tons on June 27, from around 104,000 tons in mid May.

However, as prices dipped, physical copper demand improved.

“Most semi producers have an annual target so they need to increase the total purchase volume in the third quarter when prices fall,” said CRU copper analyst He Tianyu.

LME copper price hit a record high above $11,100 in May but has fallen 14% since. In June alone, the contract fell 4.4%, the biggest monthly loss since August 2023.

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Copper consumption from wire rod producers fell at double digits in the second quarter year-on-year, the analyst said.

Most wire rod producers sign their contract based on the previous monthly or weekly prices, so their consumption will improve if prices remain relatively stable, he added.

The Yangshan copper discount has tightened to $7 a ton on June 28, from as low as a $20-discount in May, indicating improving appetite to import copper into China.

However, prices are likely to remain under pressure in the third quarter as Chinese smelters will likely boost supply after they completed their traditional maintenance season, CRU’s He said.

Demand from the copper tube sector will also be seasonally weak in the third quarter, the analyst added.

LME zinc declined 0.8% to $2,913 a ton, lead eased 0.2% to $2,219 a ton, while tin rose 0.2% to $32,800, aluminium edged up 0.1% at $2,527 and nickel was nearly flat at $17,290.

SHFE zinc fell 0.2% to 24,375 yuan a ton, aluminium edged up 0.4% at 20,320, while nickel rose 1.2% to 137,000 yuan, lead advanced 1.6% to 19,655 yuan and tin climbed 1.3% to 274,030 yuan.