Copper prices fell more than 3 percent on Wednesday, hit by a steep decline in Shanghai futures on easing supply concerns and speculation over more interest rate hikes in the United States and China.
Copper for delivery in three months on the London Metal Exchange fell $250, or 3.2 percent, to $7,550 a tonne before rebounding to $7,605 by 0702 GMT. On Select, the electronic trading platform, the metal had traded as high as $7,700. On Tuesday, it ended up $50 at $7,800. "Chinese selling filtered onto the LME as Shanghai copper went limit-down," said an LME dealer in Hong Kong.
He added: "In general, volumes were thin but there has been some bargain hunting on aluminium which has supported prices. The metals market looks to be in consolidation as energy and precious markets also corrected and awaits new impetus."
Shanghai copper futures fell by their daily limits as investors pulled money out of the market on speculation of China's further tightening steps after its annual growth jumped to 11.3 percent in the second quarter.
The most active Shanghai contract, October, fell 5 percent, or 3,460 yuan, from the previous settlement and closing price to 65,640 yuan ($8,205) a tonne before ending at $65,650.
"Copper futures may fall to around 60,000 yuan (a tonne) in coming weeks," said Hu Kaixi, a manager at Shanghai-based China International Futures. Spot copper prices in eastern China fell 3,100 yuan to between 65,100 and 65,400 yuan a tonne.
Chile's Escondida, the world's biggest copper mine, said on Tuesday the company had formally requested talks with workers to reach an agreement before their current contract expires on August 2.
"The market saw this development as a greater step toward prevention of a situation that could turn into a major supply disruption in an already extremely tight copper market and sentiment quickly turned bearish," Peter Richardson, chief metals economist at Deutsche Bank, said in a daily note. The Escondida news came a day after a strike settlement at Grupo Mexico's massive Cananea copper mine in northern Mexico.