Copper prices at 7-week low on Chinese crackdown fears
Copper prices dropped on Tuesday to their lowest since April 26, weighed down by investor fears over measures Chinese authorities could take to curb a recent price rally in commodities.
Three-month copper on the London Metal Exchange fell as much as 2.9% to $9,680 a tonne, while the most-traded July copper contract on the Shanghai Futures Exchange hit its lowest since April 23 at 69,500 yuan ($10,852.08) a tonne.
China’s state planner last week renewed its pledge to step up monitoring of commodity prices, as domestic producer inflation hit its highest in more than 12 years.
Market talks expected China to release state reserves of copper, aluminum, and zinc while also possibly trim long positions and crackdown price speculative activities.
Commodities cooling
Higher raw-material costs have been feeding concerns about inflation — commodities have surged this year amid swelling demand and optimism about the global economic recovery.
But investors have been reining in some of those bullish bets.
What we’re seeing in a lot of commodities is a peak in rising prices and a rolling over, which is a manifestation of more supply coming online, noted Art Hogan, chief strategist at National Securities.
“We’ve seen a short-term peak in a lot of those industrial materials that are important,” Hogan told Bloomberg.
“By definition, that’s transitory — that just means at some point in time, that aggregate supply meets that aggregate demand.”
