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In a sign that China’s appetite for overseas metal seems to be fading, Yangshan copper import premiums fell to $28.50 a tonne, the lowest since at least 2012.
“China’s demand could decelerate amid tightening financial condition and slowing credit growth, but this could be mitigated by strong demand from rest of the world,” ANZ analyst Soni Kumari told Reuters:
“We see many unknown factors impacting the supply side of balance and until the market gets some clarity around it, we expect prices to hold up well,”
Analysts at Citi also struck a positive note saying “refined copper market tightness is on its way once consumer destocking runs its course”:
“Our base case is that this becomes evident in the next few months and will be particularly bullish for tighter copper spreads.”
Copper prices also came under pressure after BHP said operations at its Escondida mine, the world’s largest, are unaffected by labour action at its remote operations.
Codelco’s copper production fell 0.5% year on year to 132,700 tonnes in April and BHP’s Escondida mine saw a 16.5% drop to 85,700 tonnes, the Chilean government said.
US data
Investors are also waiting for US jobs data on Friday that will offer clues on when monetary policy could tighten.
Expectations of higher interest rates could knock growth-related assets like metals and equities. World stocks hovered below all-time highs and the dollar inched higher.
Copper price reached a record high of $10,747.50 in early May, with many analysts expecting strong demand to power further gains in the coming years.
“The dips seem to be well supported,” independent analyst Robin Bhar told Reuters.
He said short-term price direction would likely be dictated by the US employment data but “I think we’ll see new record highs as we head into the fourth quarter.”
(With files from Reuters)
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