The most-traded copper contract on the Shanghai Futures Exchange fell 0.9 percent to 41,810 yuan ($6,735) a tonne on Wednesday, having plumbed a near three-month low. Attention was again focusing on the strength of copper demand from top user China.
"People here are very bearish at the moment, because the peak consumption season is already over - the market has turned very quiet again and end users have seen order books shrinking," said analyst Judy Zhu of Standard Chartered in Shanghai. "It's quite possible that we are going to revisit the lows we saw in January, but I think that level has strong support because that's the break-even point for big smelters here in China, and also it could attract SRB buying," she added, referring to the State Reserve Bureau, China's strategic commodity buyer.
"Should this upward trend in warehouse stocks continue, despite the return of a healthy contango, then the copper market in the short term is weaker than it appears." A trader said he doesn't think the market is really positioned for further losses in copper: "which makes me believe that $5,500 is attainable over the summer months."