LONDON: Copper prices pulled back on Tuesday after three sessions of gains, burdened by surging inventories and lacklustre demand in top metals consumer China.
Copper pared losses, however, after a union source told Reuters that workers at BHP’s Escondida copper mine in Chile will go on strike after failing to reach an agreement with the company.
Three-month copper on the London Metal Exchange (LME) was down 0.5% to $8,979 per metric ton by 1000 GMT, after rising 2.9% over the previous three sessions.
LME copper has shed 19% since touching a record peak of more than $11,100 a ton in May.
LME inventories extended their steep climb on Tuesday to the highest levels in nearly five years, having more than doubled over the past two months. <MCUSTX-TOTAL>
“For copper, it’s quite a negative signal. It makes people a little nervous that there’s maybe a bigger surplus out there than we recognise,” said Dan Smith, head of research at Amalgamated Metal Trading.
Copper rallies ahead of Chinese and US data
Recent inflows have been to Asian LME warehouses, indicating that China was exporting surplus material, traders said.
Latest data also gave cause for concern, showing China bank loans in July fell month-on-month and undershot analyst forecasts, highlighting weak demand in the world’s second-largest economy.
Also moderating losses was data showing some physical consumers in China taking advantage of the recent weaker prices to buy, including from the state grid, according to a copper fabricator in China.
Market positioning was also a factor, with some speculators selling to lock in short-term profits from the recent bounce, a trader said.
“We’re trying to figure out where the floor is for copper. I sense we could see a bit more downside. These wash-outs tend to run a long way and copper at $9,000 is not particularly cheap,” Smith said.
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