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Copper prices stumbled on Wednesday to the lowest in over two weeks onconcern about weak industrial profits in top metals consumer China and further U.S. rate hikes dampening economic growth and metals demand.
Three-month copper on the London Metal Exchange was down 1% at $8,277 per metric ton in official open-outcry trading, the weakest since June 12, havingretreated from a two-month high touched last week.
“The Chinese data is basically adding to the pressure that started on Friday when we quite abruptly broke that uptrend that was established at the end of May,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“The traders had been chasing the copper market for the last three weeks, but when the market gave up the upside on Friday, they were caught long and wrong once again.”
Data on Wednesday showed annual profits at China’s industrial firms extended a double-digit decline in the first five months as softening demand squeezed margins.
The most-traded July copper contract on the Shanghai Futures Exchange SCFcv1 ended day-time trade 0.6% lower at 68,040 yuan ($9,404.54) per ton.
Investors were also unsettled about the implications of strong U.S. data on Tuesday, which showed the housing market regaining strength while consumer confidence hit a 17-month peak.
“That is forcing the Fed to be on the hawkish side and the market doesn’t like that, hurting sentiment across the board,” Hansen added.
The downside in copper, however, was cushioned by tight inventory levels.
Global exchange copper stocks sank to 15-year lows, stoking concerns about supply especially if demand in top buyer China starts to pick up following the roll-out of further stimulus.
Chile’s Codelco, the world’s largest copper producer, said it was still evaluating the hit to operations from weather-related stoppages in the country’s central-south region.
The disruption has not yet had any impact on Chinese spot prices, with copper concentrate treatment charges staying at a more than four-year high at $89.50 a ton since mid-June.
LME aluminium fell 0.6% to $2,183 a metric ton in official activity, zinc shed 1.3% to $2,355, lead CMPB3 slipped 0.5% to $2,087, nickel CMNI3 tumbled 3.6% to $20,045 while tin CMSN3 was little changed at $26,275.