Copper and aluminum prices drop as gains peter out before China break
Copper and aluminum fell as a rally that had been buttressed by Chinese buying stalled with the country nearing a major holiday.
Benchmark copper futures dropped toward $13,000 a ton in London, and were near $5.90 a pound in New York, after gaining more than 2% over the prior two sessions. Chinese copper buyers are expected to extend their break over the Lunar New Year holiday — which starts next week — as still-lofty prices curb industrial demand for the commodity.
Exchange inventories have been rising in China and the wider Asian market in the run-up to the holiday, helping to replenish reserves after large volumes were drawn into the US in anticipation of tariffs. Total stockpiles held in warehouses tracked by the London Metal Exchange, Shanghai Futures Exchange and Comex now exceed 970,000 tons, the highest since 2003, with more than half of that held in the US.
“We are seeing some consolidation around $6 a pound and some reluctance from end users to buy at elevated prices,” Sam Crittenden, an analyst at RBC Capital Markets, said in a note. “However, we expect the momentum in prices to continue in the coming years as demand continues to push higher and supply struggles to keep up.”
Copper had been rising — hitting a record in late January — as investors piled into commodities amid doubts over the US dollar, part of a shift away from currencies and sovereign bonds. The rally saw a further boost thanks to a wave of buying from Chinese investors, who are now easing off.
Copper dropped 0.5% to settle at $13,108 a ton on the LME. Prices had hit an all-time high above $14,500 on Jan. 29. Aluminum was down 1% at $3,093 a ton, while all other metals were higher.