Copper slid to three-month lows as a tentative recovery in broader financial markets lost steam, with geopolitical tensions and fading hopes of a boost to US demand putting pressure on prices.
The metal slipped this week along with other cyclical assets as concerns over North Korea and the Middle East ratchet higher. While equities initially recovered some losses on Wednesday, they quickly lost momentum, while copper continued to languish.
A molten mixture of lead and bronze pours from a cauldron into moulds in the foundry at a copper mining and smelting complex in Bor, Serbia. Photo: Oliver Bunic
“Copper had such a strong ride after the US elections last year, due to the specific story about infrastructure and defence spending in the US, so it’s possible for risk sentiment to stabilise without it really helping copper,” Danske Bank analyst Jens Pedersen said.
“Base metals have performed rather poorly, owing to risk aversion, and perhaps some impatience over the lack of details around Trump’s plans for infrastructure,” he said.
Copper, widely used in construction, rallied to its highest since mid-2015 in the months following Donald Trump’s US presidential election win in November on the back of his pledge to boost infrastructure spending.
London Metal Exchange copper closed down 2.1 per cent at $US5628 a tonne. Earlier in the session, it slumped to $US5615, its lowest since early January.
Chinese President Xi Jinping called for a peaceful resolution of rising tensions on the Korean peninsula in a telephone conversation with Trump, as a US aircraft carrier strike group steamed towards the region.
A break in alarming political news lifted European stocks, though the mood remained skittish, tarnishing an otherwise brightening outlook for global economic growth.
Losses amounting to hundreds of millions of dollars appear to be pushing the Indonesian government and mining giant Freeport McMoRan to resolve a row that has crippled operations at Grasberg, the world’s richest copper mine, for three months.
Diversified miner Rio Tinto restated on Wednesday its decision to continue discussions over the future of its stake in the Grasberg mine.
Anglo-Australian miner BHP Billiton dismissed a wide-ranging proposal by shareholder Elliott Advisors to overhaul its corporate strategy and sell off oil interests, saying the measures would not benefit the company.
LME copper may retest support at $US5724 per tonne, with a good chance of breaking below this level and falling more to the next support at $US5689.
Aluminium stocks held in LME-registered warehouses fell 13,575 tonnes on Tuesday to their lowest since late 2008, exchange data showed. LME aluminium closed down 1.2 per cent at $US1898 a tonne.
LME nickel ended the day down 1.1 per cent at $US9735 a tonne, while tin was down 3 per cent at $US19,405. Zinc ended 1.4 per cent higher at $US2605 and lead finished the day down 0.3 per cent at $US2242.