LONDON: Copper prices fell on Tuesday as soaring energy costs prompted concern that the global economic recovery will be derailed and stock markets fell, but signs that supply is tightening kept a lid on losses.
Benchmark copper on the London Metal Exchange (LME) was down 0.5% at $9,495 a tonne in official trading, snapping three days of gains.
Prices rose to a record high of $10,747.50 in May before slipping as the world’s economic recovery began to falter.
Logistics bottlenecks have helped drive copper stocks to “historically low” levels in regions that use the metal, analysts at JPMorgan said in a note.
“This remains an upside risk in the near term,” they said.
But they said supply remained robust. “We maintain a bearish bias on prices and forecast an $8,900/t average in 4Q21 with prices moving back down towards an average of $8,200/t in 4Q22,” they said.
Aluminium hits highest since 2008 as power shortages escalate
Markets: Asian stock markets fell. European shares were fighting back from heavy losses. Authorities from Beijing to Chennai scrambled to fill a yawning power supply gap.
China Construction: China Evergrande Group missed its third round of bond payments in three weeks, intensifying market fears over contagion.
China Exports: China’s export growth likely slowed in September, a Reuters poll showed.
Copper Stocks: On warrant copper inventories in LME-registered warehouses have fallen to 65,500 tonnes from almost 240,000 in August.
Stocks in Shanghai Futures Exchange (ShFE) warehouses at 50,062 tonnes are near 12-year lows and inventories in Chinese bonded warehouses have almost halved since July.
Copper Spread: The premium for cash copper over the three-month contract on the LME shot to nearly $70 a tonne, the highest since 2015. A premium points to tight supply of metal.
China Premium: Chinese Yangshan copper import premiums rose to $130 a tonne, the highest since 2014, pointing to strong demand in China for overseas metal.
Lead/Zinc: The global lead and zinc markets will be slightly oversupplied this year and next, the International Lead and Zinc Study Group (ILZSG) said.
Other Metals: LME aluminium was up 0.3% at $3,072 a tonne, zinc rose 0.4% to $3,244, nickel added 1.1% to $19,330, lead was up 0.4% at $2,237 and tin was 0.2% higher at $36,450.