METALS-LME copper slips on uncertainty over China smelter cuts

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(Updates prices) By Eric Onstad LONDON, March 14 (Reuters) - Copper prices in London eased on Thursday, retreating from an 11-month peak as doubts emerged over plans by Chinese smelters to cut output while demand in the top metals consumer remained lacklustre. Three-month copper CMCU3 on the London Metal Exchange had slipped 0.3% to $8,902 a metric ton by 1715 GMT, having spiked to $8,976.50 for its strongest since April 19 last year. U.S. Comex copper futures HGcv1 dropped 0.3% to $4.05 a lb. Copper was also pressured after the dollar index =USD strengthened because data showed U.S. producer prices increased more than expected in February. A firmer dollar makes commodities priced in the U.S. currency more expensive for buyers using other currencies. Copper prices surged on Wednesday after China's biggest copper smelters agreed to cut output at some loss-making plants while adjusting maintenance plans and postponing new projects. "The news around the Chinese smelter cuts is grey, there's no clarity on it. I don't think they're going to cut, they're going to keep churning out metal," said Alastair Munro, senior base metals strategist at broker Marex. Chinese smelters had been hit by a sharp fall in the fees to process copper concentrate, but analysts had forecast that they could rebound in the second quarter, the seasonal peak of Chinese smelting maintenance. "In Shanghai they've seen big stock builds and there's no sign of any real physical demand in the here and now," Munro added. Inventories in warehouses monitored by the Shanghai Futures Exchange (SHFE) have nearly tripled over the past month to 239,245 tons, weekly data shows. CU-STX-SGH The rally has been fuelled by speculators and funds, some of which were still buying this morning, Munro said. "It's a money-led rally, which can continue," he said. SHFE prices rallied to their highest in nearly three years, with the most-traded May copper contract SCFcv1 jumping as much as 3.5% to its highest since May 2021 before paring gains and closing daytime trade with a 2.2% gain. Munro said some arbitrage traders were selling LME and buying Shanghai copper. Among other metals, LME aluminium CMAL3 fell 0.5% to $2,253 a ton, nickel CMNI3 dropped by 1.2% to $18,135, zinc CMZN3 shed 0.9% to $2,552 and lead CMPB3 eased 0.6% to $2,155.50. Tin CMSN3 was 0.8% higher at $28,300, having touched $28,450 for its highest since August. For the top stories in metals, click TOP/MTL (Reporting by Eric Onstad Additional reporting by Siyi Liu and Mei Mei Chu in Beijing and Mai Nguyen in Hanoi Editing by David Goodman, Kirsten Donovan) (([email protected]; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: [email protected])) (( For related news and prices, click on the codes in brackets: LME price overview RING= COMEX copper futures 0#HG: All metals news MTL All commodities news C Foreign exchange rates FX= SPEED GUIDES LME/INDEX ))
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Published Date
14 Mar 2024 at 7:21 PM
Publisher
Refinitiv
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