Copper costs fell on Thursday as South America’s considerations eased and seasonal weakness in demand for China’s top customer resurfaced.
Three-month copper on the London Metal Exchange fell 1% to $6,373.50 a tonne in official trading.
Disruptions to the COVID-19 source at Chile’s largest manufacturer and flooding in China helped boost copper to a maximum of two years in July, however, miners in the South American country regained strength while neighboring Peru also restarted production after the closures.
“With supply concerns in Chile and Peru subsiding and the effects of China’s fiscal impulse largely already felt, sentiment for copper has incrementally weakened,” said BMO Capital Markets analyst Tim Wood-Dow.
The copper market has focused on fundamentals, leading it to the industry in a narrow diversity of between $6400 and $6,500 for approximately six weeks, Commerzbank analysts said.
INVENTORY: China’s lower demand can be felt through higher copper inventories in SHFE CU-STX-SGH warehouses, while a drop in inventories in MCUSTX-TOTAL LME warehouses has provided some valuable backup.
The third quarter is seen as a traditionally seasonally weak period for Chinese demand, analysts say.
AMERICAN STIMULUS: The Republican White House of the United States And Congressional Democrats have been stuck for days to propose a coronavirus bill in the U.S.
Prices were also under pressure from tensions between the United States and China before a weekend meeting between industry officials in the two countries.
CODELCO SUPPLY: Chilean miner Codelco, the world’s largest copper producer, is waiting for advances in expanding the processing capacity of its underground project Chuquicamata.