- Recent metals rally didn't reflect fundamentals, SocGen says
- `That supply imbalance is getting aggressive': Long Leaf
Copper dropped to the lowest in more than two weeks as metals retreated on concern that weak demand in China, the world’s largest user, points to persistent supply gluts.
China is set to cut copper imports from a record high as swelling stockpiles discourage purchases, analysts at firms including Macquarie Group Ltd. and Jinrui Futures Co. said. The nation’s refined-copper output will probably hold close to last year’s levels, as output cuts pledged in December are offset by new capacity, according to the country’s biggest smelter.
“That supply imbalance is getting aggressive,” Tim Evans, the chief market strategist at Long Leaf Trading Group Inc. in Chicago, said in a telephone interview. “We’re not dealing in a very robust economic period. Copper is obviously is a good barometer of growth, and given the recent numbers that we’re having, copper is taking the brunt of it.”
Copper for delivery in three months slipped 1.7 percent to settle at $4,785 a metric ton ($2.17 a pound) at 5:51 p.m. on the London Metal Exchange, after touching $4,767, the lowest since April 18. Aluminum, lead, nickel, tin and zinc also fell.
Copper posted the biggest monthly gain in a year in April as signs of stabilizing manufacturing in China and the U.S. boosted speculation that demand would rebound. The metal headed for a third straight loss on Thursday.
“We got ahead of ourselves and we didn’t rally on fundamentals,” Robin Bhar, an analyst at Societe Generale SA in London, said by phone. “We rallied on speculative activity on the back of frenzied activity in China. That’s why the rally is now petering out like this.”
- Copper futures for July delivery declined 1.5 percent to $2.154 a pound on the Comex in New York.