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 1.3% to $8,816 per metric ton by 1000 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 four and half 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.”
Copper losses deepen on investor fears of potential slowdown
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.
Among other metals, LME aluminium dropped 1.4% to $2,265 a ton, zinc shed 0.9% to $2,578, nickel fell 0.6% to $16,290, while lead rose 0.5% to $1,963 and tin advanced 1.2% to $30,000.
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