LONDON: Copper prices resumed their downtrend on Wednesday after data from leading metals consumer China showed weak demand and a surge in inventories highlighted excess supply.

Three-month copper on the London Metal Exchange lost 1.7% to $8,779 per metric ton by 1400 GMT, reversing gains in the previous session. LME copper has shed 21% since hitting a record high above $11,100 a ton in May and touched the weakest in 4-1/2 months on Monday.

LME data on Wednesday showed that copper inventories jumped by 17% in one day to the highest since September 2019, having more than doubled over the past two months.

“There is still a long-term bullish story for copper, but it has certainly faded with the inventories continuing to rise,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “We need interest rates to come down in earnest, thereby bringing down the funding costs of holding commodities, and we need to see this de-leveraging phase run its course.”

Technical indicators based on the decline from the May peak indicate that the next major downside target is $8,400, Hansen added. Data from China added to investor worries as imports of unwrought copper and products fell 2.9% in July from a year earlier.

Data also showed the country’s overall exports grew at their slowest pace in three months in July, missing expectations and adding to concerns about the outlook for the nation’s vast manufacturing sector. Also weighing on the market was a firmer dollar index, making dollar-priced metals such as copper more expensive for buyers using other currencies.

LME nickel fell 1% to $16,230 a ton, although it is the best-performing LME metal over the past month. “Global supply has flatlined in recent months, while demand has pushed higher, flipping the global nickel market into a deficit,” Bank of America analyst Michael Widmer said in a note.

Among other metals, LME aluminium dropped 1.8% to $2,255.50 a ton, zinc shed 1.4% to $2,564, while lead added 0.2% to $1,958 and tin advanced 0.7% to $29,860.