The most-traded October copper contract on the Shanghai Futures Exchange reversed early gains to drop by 0.22 percent to 50,130 yuan ($8,200) a tonne on Thursday as traders took to the sidelines ahead of a key US jobs report, dousing a rally fuelled by short covering and a squeeze on Chinese supply.
Copper prices have rebounded five percent from three year lows touched last week as China's buyers rushed to secure stock, but the impact has been muted by lower overall demand from the world's top metals consumer. "The net shorts were at pretty high levels prior to this week and all it took was some awareness that China is actually looking for a lot of copper and there is not a lot available in the market," analyst Sijin Cheng of Barclays in Singapore.
"There have been small improvements in the physical market, but not necessarily enough to drive a sustained rally." China is the world's top copper consumer, accounting for around 40 percent of refined demand, but a slowdown in its demand growth this year has darkened copper's outlook.
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