Copper dropped from the highest level in more than 10 weeks, declining for the first day in seven sessions, as gains were seen overdone amid lingering concern that the global economic recovery may slow.
The metal for three-month delivery fell as much as 1.1 percent to $7,070 a metric ton on the London Metal Exchange and traded at $7,075 at 3:26 p.m. in Shanghai. Zinc declined as much as 1.1 percent to $1,932 a ton.
Shrinking inventories, a rally in equity markets and declines in the dollar drove copper to $7,149.15 yesterday, the highest intraday price since May 13. The metal had its first quarterly loss since 2008 in the April-to-June period on concern that the recovery was faltering.
“London copper is having a technical correction after reaching the $7,100 resistance level,” said Ji Guoqin, an analyst at Zhejiang Zhongda Futures Co., referring to a price where sell positions are clustered.
China’s stocks dropped for the first time in seven days on concern about rising credit risks at banks. Chinese banks may struggle to recoup part of the loans they’ve lent for infrastructure projects, according to a person with knowledge of data collected by the China Banking Regulatory Commission. The country this year restricted borrowing on concern money isn’t being used for viable projects.
“Investors are cautious before they make sure China’s economy is really on the uptrend,” Ji said. China is the world’s largest metals consumer.
Norsk Hydro ASA said it expected global aluminum production, excluding China, to exceed demand this year and most of the capacity that has been curtailed is unlikely to restart. China will be “broadly balanced in primary aluminum,” with a “modest” surplus, the company said in a website presentation.
Copper for October delivery in Shanghai dropped 0.7 percent to 55,190 yuan ($8,142) a ton at 2:52 p.m. local time. Aluminum futures in London slid 0.2 percent to $2,053 a ton, while nickel was little changed at $20,818 a ton. Lead fell 0.5 percent to $2,005 a ton and tin climbed 0.5 percent to $19,500 a ton after earlier rising to the highest level since September 2008.