Copper prices fall after easing in contraction of the London Metal Exchange

Copper prices fell on Thursday as a small contraction in the London Metal Exchange (LME) eased, with attention focused on the threat of a slowdown in demand in China.

At 1105 GMT, three-month copper on the LME was down 2.6% to US $ 9,926 a ton, while the premium for spot copper over the three-month contract fell to US $ 267.50.

The premium for early delivery spot copper had risen to $ 1,103 on Monday, by far the highest on record. On-warrant stocks in deposits registered with the LME total 18,250 tonnes, close to lows of several decades.

The contraction pushed copper’s benchmark price as high as 10% last week and to $ 10,452.50 on Monday, just shy of all-time highs.

The operator’s inventories represent a fraction of the material on hand and the sudden stress on the LME does not reflect the broader market, according to Julius Baer analyst Carsten Menke.

“We see a relaxation in the copper market”He said, pointing to rising supply of mine and scrap and slowing demand in China, which is suffering from power shortages and weakening economic growth. “Prices should be lower by the end of the year”He added.