Copper slips on concerns about China demand, ample supply and bigger stock

LONDON — Copper prices slipped on Monday as worries about demand from top consumer China were reinforced by expectations of ample supplies and higher inventories in exchange-monitored warehouses.

Benchmark copper on the London Metal Exchange (LME) ended down 0.90% at $ 5,880 a ton, having last week touched $ 5,948.50, its highest since March 6.

“There is nothing to suggest the market is tight,” Julius Baer analyst Carsten Menke said.

“We need to see signs of tightness driven by the supply disruptions, or if the market is amply supplied, as it seems to be at the moment, I’d say prices need to come down.”

Inventories of copper in warehouses monitored by the Shanghai Futures Exchange have more than doubled to 325,278 tons since early January. Stocks in LME-approved warehouses, at 332,975 tons, are up nearly 70% since early February.

“High levels of refined inventories have immunized the copper market from strong price appreciation,” Barclays analyst Dane Davis said in a note. “But this is not just a story about refined inventories… (scrap) that has been sitting on the sidelines for years has flooded into the market.”

Supply disruptions in Chile, Indonesia and Peru have boosted copper this year.

Copper is holding above the 21- day moving average around $5,895, support at $5,860 near the 55-day moving average.

Worries about demand after G20 finance ministers dropped a pledge to keep global trade free and open weighed on prices of industrial metals overall.

Among other industrial metals, aluminum closed up 0.40% to $1,922 a ton, zinc slipped 0.60% to $2,864, tin added 0.40% to $20,350 and nickel lost 0.90% to $10,165. Zinc earlier touched $2,900.50, highest since Feb. 16, on reports that Chinese zinc smelters are planning maintenance that could cut 540,000 tons a year of capacity. That could mean a larger than expected zinc deficit this year.

Lead was untraded at the close, but bid down 0.70% to $2,274. —