Metals: Copper drifts lower on disquiet about China as inventories rise

Sumitomo Metal Mining

05/10/2023 13:30

(Updates prices as of 1600 GMT)
    By Eric Onstad
       LONDON, Oct 5 (Reuters) - Copper prices fell on Thursday
for the fourth straight session as investors unloaded positions
on persistent worries about demand in China and uncertainty
about interest rates and global growth.
    Three-month copper on the London Metal Exchange  CMCU3  was
down 0.7% to $7,893 per metric ton by 1600 GMT, coming close to
lows touched in May.
    LME copper has lost 4.5% so far this week, on track for the
biggest weekly decline since November 2022.     
    "The economic data isn't conclusive on several fronts. The
U.S. has moderate strengthening in economic data, meaning it's
not clear that the Fed has reached the peak in monetary
tightening," said Nitesh Shah, commodity strategist at
WisdomTree.
    "The medium-term journey is for significant increases in
copper demand for the energy transition, but the short term is a
bit more difficult because demand remains weak from China, where
the data is not indicating that its economy is pushing ahead in
any meaningful way."  
    A steep sell-off in bonds rattled financial markets
including commodities on Wednesday as it pushed Treasury prices
to 17-year lows and investors remain worried about U.S.
government spending and a ballooning budget deficit.
    Computer-driven Commodity Trading Advisor (CTA) funds have
been behind a good deal of the selling, Al Munro at broker Marex
said in a note.
    "The base metals see no love with CTA sell programmes
remaining in evidence as shorts rebuild on copper, ali
(aluminium) and zinc."
    Weak metals demand has been highlighted recently by rising
inventories.
    LME copper stocks  MCUSTX-TOTAL  rose to 169,900 metric
tons, the highest since May 2022 and more than tripling since
mid-July, LME data showed on Thursday.
    LME lead  CMPB3  rose 1.1% to $2,141 a metric ton despite
LME inventories climbing to 83,600 tons, the highest in more
than two years. The stocks surged by 55% over the past three
weeks.
    In nickel, the global surplus is expected to widen to 36,000
tons next year, Japan's biggest nickel smelter Sumitomo Metal
Mining  5713.T  said.
    LME nickel  CMNI3  shed 1.1% to $18,525, having lost 39% so
far this year, the worst performer across all LME base metals.
    In other metals, LME aluminium  CMAL3  declined 0.6% to
$2,233.5, zinc  CMZN3  fell 0.7% to $2,475.5, while tin  CMSN3 
rose 0.7% to $24,100.

 (Reporting by Eric Onstad; additional reporting by Mai Nguyen
in Hanoi and Polina Devitt in London; Editing by Shailesh Kuber
and David Gregorio)
 ((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO;
 Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))
 
(( For related news and prices, click on the codes in brackets:
 LME price overview       RING=  COMEX copper futures   0#HG: 
 All metals news          MTL    All commodities news       C  
 Foreign exchange rates  FX=     SPEED GUIDES  LME/INDEX ))