Copper ends winning streak on profit taking

JOHANNESBURG — Copper slumped on Friday on profit taking as analysts said a 20% price surge since June was not justified given China’s copper imports had only been stable for the past four months.

Benchmark copper on the London Metal Exchange (LME) closed down 3% at $6,693 a ton after falling as low as $ 6,691, a level not seen since Aug. 25.

Chinese data for August showed imports of copper and copper products held steady in the world’s largest consumer for a fourth month in a row, rather than rising as some had hoped.

“The fundamentals of copper don’t justify the price,” said Capital Economics senior commodities economist Caroline Bain, adding that investors were taking profits from recent highs.

Chinese imports of unwrought copper totaled 390,000 tons in August, customs data showed on Friday. Monthly imports, which include anode, refined, alloy and semi- finished copper products, have been around that level since May.

“In the months ahead there might be a lift in metal imports… if there is a restriction on smelter production due to environmental inspections,” said Daniel Morgan, an analyst at UBS in Sydney.

“That would be bullish for copper.”

On- warrant copper inventories in LME- approved warehouses inched higher on Friday, indicating the market was generally well supplied. But stocks have declined by about 26% over the last month.

A weaker dollar underpinned metals prices, however, after European Central Bank head Mario Draghi said the bank was looking at how to wind down its € 60 billion- a- month buying program.

“China’s aluminum exports are the lowest since March which reflects a supply side contraction on the mainland. I would expect number to contract further in the months ahead because we have had some shuts of illegal capacity and there are going to be winter shuts from Nov. 15,” UBS analyst Morgan said. Aluminum fell 0.40% to $2,099. Nickel slid 4.70% to $11,580. “The nickel price had been boosted by Philippines President Rodrigo Duterte waging a war on the mining industry but despite the lower ore supply, stocks of refined metal are still very high,” said Capital Economics’ Bain.

Lead ended 3.20% lower at $2,265, tin fell 1% to $20,500 and zinc shed 3.10% to hit $3,031. —