LONDON: Copper prices fell for a fifth consecutive day on Tuesday, reaching a five-week low as Chinese demand remained weak and inventories in the London Metal Exchange (LME) warehouse system rose.
Benchmark LME copper was down 1.9% at $8,563.50 a tonne by 1055 GMT. The metal used in electrical wiring has fallen from a seven-month high of $9,550.50 in January.
Behind the price weakness is a weaker than hoped rebound in demand from top consumer China and a gloomy economic outlook elsewhere.
China demand blues push copper prices to more than two-week low
Chinese stock markets fell for a fifth day after last week’s first-quarter GDP numbers revealed an uneven rebound and lagging factory and property activity.
Global stock markets were also down and the dollar strengthened, pressuring metals by making them costlier for buyers holding other currencies.
Visible Chinese copper inventories are drawing down, but Yangshan import premiums have slumped to $23 a tonne from $50 in March, pointing to weak demand.
On-warrant copper stocks in LME-registered warehouses, meanwhile, rose by 7,000 tonnes to 57,025 tonnes, their highest since mid-January.
Copper demand should improve as the year goes on, lifting prices, said WisdomTree analyst Nitesh Shah. “There is more reason to be optimistic than pessimistic,” he said.
LME aluminium fell 2.2% to $2,329 a tonne and was down from a seven-month high of $2,679.50 in January.
Analysts at Citi said that aluminium smelters in China’s Yunnan province – which have already cut production capacity by around 2 million tonnes per year – may have to reduce output further because of drought, supporting prices.
LME lead was down 0.7% at $2,127.50 a tonne even as concerns about metal availability pushed up the premium for buying metal tomorrow and selling it the day after – a trade known as tom-next
Exchange data showed that one entity held more than 50% of lead warrants, fuelling availability concerns.
Benchmark zinc was down 1.4% at $2,633 a tonne, nickel fell 1.8% to $24,150 and tin slipped by 1.5% to $26,240.