Copper eases as China industrial profits slow, stocks climb
LONDON — Copper edged lower on Monday as slowing profit growth in industrial firms in top consumer China metals, rising inventories and low premiums sapped enthusiasm for the metal.
Benchmark three-month copper on the London Metal Exchange (LME) shed 0.2% to $9,397.50 a ton by 1620 GMT. The metal hit a record of $10,747.50 per ton in May.
Profit growth at China’s industrial firms slowed again in May as surging raw material prices squeezed margins and weighed on factory activity.
High prices spurred the Chinese government to cool prices by releasing some of its metal stockpiles.
On-warrant inventories of copper in LME registered warehouses have jumped to their highest since May 2020, while Yangshan premiums of the metal going into China languished.
“The short-term fundamentals have not managed to keep up with the extent to which prices have rallied,” said Saxo Bank analyst Ole Hansen, citing rising LME stocks and low premiums.
“The market has fallen in love with copper due to its green credentials and electrification focus but a rise in demand related to that has not started to pick up yet.”
PREMIUMS: The Yangshan copper premium inched up to $26 a ton but was still hovering around its lowest since February 2016, indicating weak demand for imported metal into China.
POSITIONING: Funds have cut their longs in LME copper for a sixth straight week to 6% of open interest or 12,000 lots as of Thursday compared to 62% in February, according to broker Marex.
DEMAND: Investors were keenly watching progress on a $1.2-trillion US infrastructure deal which could benefit metals demand.
WEEK AHEAD: Market focus shifts to the release of China’s official factory activity data on Wednesday and key US payroll data on Friday.
NICKEL: LME nickel inventories are at their lowest since March 2020 while those monitored by the Shanghai Futures Exchange are at record lows.
OTHER PRICES: Aluminum was up 1% at $2,513, zinc rose 0.3% to $2,915, lead gained 0.8% to $2,238, tin added 1.1% to $31,110 and nickel gave up 1.2% to $18,305.