LONDON: Copper on Friday was on track for its biggest weekly fall since March 2020 after the Federal Reserve signalled it would begin to tighten monetary policy and China said it would sell state reserves to limit prices.

The shift in tone from the US central bank also pushed the US dollar towards its largest weekly gain since April 2020, making metals more expensive for buyers with other currencies.

Stock markets fell.

Benchmark copper on the London Metal Exchange (LME) was down 1.7% at $9,159 a tonne at 1650 GMT and down around 8.5% this week.

The sell-off follows a remarkable rally, with the metal used in power and construction reaching a record high of $10,747.50 in May.

“We probably have seen the peak for this year,” said ING analyst Wenyu Yao, adding that rising demand from infrastructure building and electrification would likely keep prices around current levels in the coming years.

Macquarie also said it expected a deficit of copper this year, small surpluses over 2022-2024 and structural undersupply from 2025. They said prices would average around $8,000-$9,000 over the next four years.

Copper fell below its 100-day moving average at $9,242, worsening its technical picture.

Copper inventories in LME-registered warehouses rose by 24,925 tonnes to 168,675 tonnes, the highest level since April.

Stockpiles in warehouses registered with the Shanghai Futures Exchange fell by 8,440 tonnes to 172,527 tonnes in the week to Friday.

China’s aluminium imports declined in May and its copper exports rose, customs data showed.

LME aluminium was down 0.5% at $2,387 a tonne, zinc fell 2.6% to $2,836.50, nickel was flat at $17,170 and tin was down 2% at $30,000.

Lead bucked the trend, rising 1.4% to $2,160.