Wednesday, 26 August 2015 17:06
LONDON: Copper fell by 2.5 percent on Wednesday, wiping out the previous session’s gains, on concern that Beijing’s interest rate cuts might not be enough to avert a China-led slowdown in the global economy.
Global equities also gave up gains made on Tuesday after China’s central bank lowered rates and the amount of reserves that banks must hold for the second time in as many months.
Cash copper, however, traded near its highest premium against the three-month price since February, indicating that physical copper is not that easy to come by.
Speculators on the London Metal Exchange (LME) held a net long, or buy, position on copper at the end of last week.
“When investor sentiment is as poor as it is, prices can always go lower; but the reaction is overdone. (Copper) premiums in China have surged.
Couple that with imports, with copper products output, none of it is looking like we should be panicking,” Capital Economics analyst Caroline Bain.
Three-month LME copper was down 2.5 percent at $ 4,937 a tonne by 1007 GMT.
The industrial metal hit a six-year low of $ 4,855 on Monday. In more bullish news, Freeport-McMoran said that copper exports from its giant Indonesian mine have slowed to a trickle over the past month as it contends with new rules on how buyers pay for metal.
Meanwhile, expectations that a weaker yuan would increase the cost of Chinese imports of refined copper have supported domestic prices in the world’s biggest metals consumer, pushing premiums to their highest this year.
The investor focus, however, remains firmly on China’s macroeconomic woes.
“China will find that this will be a diminishing-return game, akin to pushing on a string.
The economy does not need more credit or easier money – it is suffering from excess capacity and sub-par consumer demand, with the only driver in terms of spending being the government,” INTL FCStone analyst Edward Meir said.
LME zinc was down 2.6 percent at $ 1,693, having having fallen to its lowest since 2010 at $ 1,686.50.
Data showed LME stocks at their highest since March, having risen for most of August.
Aluminium slipped 1.2 percent to $ 1,538, having also clocked a six-year low on Monday.
Century Aluminum Co said on Tuesday that it will idle its smelter in Hawesville, Kentucky.
It will be the first aluminum plant to shut in years, with producers feeling the effects of sinking prices and increased Chinese exports.
Tin was down 2.8 percent at $ 13,850 after touching $ 13,835, its lowest since early August.
