Commodities

Shanghai copper sinks as LME inventories jump

Reuters Beijing | Updated on January 24, 2018 Published on January 24, 2018

copper

Shanghai copper prices fell on Wednesday, tracking a sharp decline in London on Tuesday after London Metal Exchange (LME) refined copper inventories surged and concerns grew over the strength of import demand in top copper consumer China.

On-warrant copper stocks, metal not earmarked for delivery from warehouses and available for investors, in facilities certified by the LME had jumped 28 per cent on Tuesday, data showed, with traders saying there could be even more to come. Cancelled LME warrants, or orders to take copper out of a warehouse, plunged 16 per cent on Tuesday to 44,000 tonnes, the biggest decline in the past four months, according to brokerage Argonaut Securities.

“This decline in cancelled warrants may point to a weak imports appetite from China in January,” analyst Helen Lau wrote in a note. China imported 450,000 tonnes of unwrought copper in December, down 6.9 per cent year-on-year, according to Customs data released on Tuesday.

China's own refined copper production was also at an all-time high of 865,000 tonnes last month.

SHFE copper: The most-traded March copper contract on the Shanghai Futures Exchange (ShFE) ended down 1.7 per cent at 52,730 yuan ($8,249.89) a tonne, its biggest daily drop since December 6 and its its lowest close since December 14.

LME copper: Three-month copper on the LME gained 0.3 per cent to $6,945 a tonne at 0754 GMT, partly recovering from a 2.1 percent drop to a one-month low in the previous session.

LME inventories: “All eyes will focus on the stocks again today to see if this is the start of a short-term trend or yesterday was a one-off,” broker Marex Spectron said in a note. The dollar index was down 0.2 per cent to a three-year low. A weak greenback makes dollar-denominated metals cheaper for holders of other currencies and supports prices.

Lead/zinc: ShFE lead's recent rally ran out of steam as the metal closed flat at 19,575 yuan a tonne, while zinc shed 1 per cent to 25,875 a tonne. Both were also trading down in London.

Chile's conservative President-elect Sebastian Pinera had on Tuesday named a former finance minister in the top copper exporter, Felipe Larrain, to fill the same spot again in his new cabinet. The top US securities regulator had on Tuesday rejected arguments by Rio Tinto Plc, and two former top executives that its civil lawsuit claiming they concealed the plunging value of coal assets owned by the big Anglo-Australian mining company should be dismissed.

Anglo American PLC had said on Tuesday it expects to receive long-awaited licenses on Friday which will pave the way for the mining company to boost its Brazilian iron ore production capacity by about 56 per cent.

Published on January 24, 2018
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