Copper prices fall after China agrees to cool coal prices

Copper and other base metals fell on Wednesday after China announced that it would intervene to lower coal prices, and before technical signs that some metals would be overbought after the sharp jump in prices this week.

At 1135 GMT, three-month copper on the London Metal Exchange (LME) was down 1.5% to $ 10,005 a tonne, its third consecutive session of declines.

However, extremely low inventory levels in many metals, including copper, have prevented prices from declining further, analysts say.

“We do not believe that the current price reversal marks the beginning of a trend reversal. In recent months, China has used various measures, such as freeing up state reserves, in a vain attempt to cool escalating prices.”Said Daniel Briesemann, an analyst at Commerzbank.

Low inventories of the red metal in the LME system pushed prices to a high of $ 10,452.50 on Monday, close to May’s record of $ 10,747.50.

The LME spot copper premium over the three-month contract eased to about $ 157 per tonne from a record high of $ 1,103.50 on Monday, pointing to a decline in concerns about the metal soon. entega.

Copper on-warrant stocks in LME-registered deposits increased by 2,650 tonnes to 17,875 tonnes, still near lows since 1998. Inventories on the Shanghai Futures Exchange (ShFE) total 41,668 tonnes, their lowest level since 2009 .

“There are very tight copper stocks at the moment and that is still concerning, but prices (are) decelerating mainly on technical signals showing that copper was overbought.”Said Xiao Fu, Head of Commodity Strategy at Bank of China International.

The LME, the world’s oldest and largest industrial metals market, intervened Tuesday night, declaring that it would amend lending rules and implement a backwardation limit and deferral mechanism for copper trading with immediate effect. .