Shanghai copper fell 1.3 percent on Tuesday, following losses in London overnight as concerns that the United States is running into recession dampened enthusiasm for industrial metals.
But analysts said the declines, which have seen London copper fall $500 or nearly 6 percent since hitting an all-time high of $8,820 a tonne late last week, might just be a temporary setback and more records might be just around the corner. The May copper contract, the most active on the Shanghai Futures Exchange, lost 870 yuan to 67,500 yuan ($9,499) a tonne.
Shanghai copper prices have eased from an 8-month high around 70,500 yuan at the start of March. "The rally in Shanghai copper was partly caused by overseas funds entering the market," Sheng Weimin, an analyst with Maike Futures Brokerage. "The Federal Reserve is expected to cut interest rates again, which will encourage more funds to invest in China's futures market.
We may see Shanghai copper hit a record before May." Chinese consumers, reluctant to buy copper when London Metal Exchange prices get above $8,000 a tonne, have been delaying purchases, and running down their stocks. Copper for delivery in three months on the London Metal Exchange rose $30 to $8,340.
Weak data from the United States and slowing Chinese copper imports have dented sentiment towards metals, until now seen as a sure-fire bet against inflation and turbulent equity markets.