Copper prices dropped on Friday due to concerns over surplus supplies and sluggish demand in China, the leading metals consumer. The three-month copper on the London Metal Exchange fell 1.5% to $9,709 a metric ton after three days of gains, marking a 13% decrease since reaching a record peak last month. US Comex copper futures also fell 2.3% to $4.46 a lb.
Ole Hansen, head of commodity strategy at Saxo Bank, stated, “The market has been trying to figure out whether the correction phase is coming to an end, but I think it’s still too early to call a turnaround. We need data, especially Chinese data, to be more supportive.” China’s weakening currency, the yuan, has contributed to the decline in copper prices, making commodities in dollar-pricing more expensive for Chinese buyers.
Despite the decrease in prices, brokers in Asia reported increased physical purchases of copper this week, providing support around $9,500 to $9,600 a ton. However, an overhang of metals has been weighing on the copper market, with SHFE copper stocks increasing tenfold since the beginning of the year to 322,910 tons. Global data also showed a surplus of 13,000 tons in April and excess supply of 299,000 tons in the first four months of the year.
In addition to copper, other metals on the LME also experienced price decreases, including aluminium, nickel, zinc, lead, and tin. The market will continue to monitor Chinese data and the impact of the weakening yuan on industrial metals in the coming days.
