The most-traded August copper contract price on the SHFE dropped to 53,830 yuan ($8,407) per tonne as at 10.28am Shanghai time, down 330 yuan per tonne from Monday’s close.
Falling 0.6% so far in the morning session, red metal prices have come under pressure from a stronger dollar and easing supply-side concerns, which offset declines in exchange inventory levels.
The US dollar index rose steadily overnight and reached a high of 93.90 earlier this morning. This compares with the recent low of 93.21 on June 7.
“A stronger USD and easing concerns about supply disruptions saw industrials ease lower at the start of the week. This saw copper prices tumble, after rising strongly over the past couple of weeks,” ANZ Research noted on Tuesday.
On the supply side, expectations of a resolution being reached in labor negotiations at Escondida, the world’s largest copper mine, have dented investors’ appetite for the red metal.
“Copper continues to struggle on reports of Escondida saying over the weekend that it expects to resolve its labor negotiations successfully. Prices had run up for much of last week on expectations that the negotiations would run into difficulties, but we were skeptical about this market view given that the talks had barely started,” Edward Meir, analyst at INTL FCStone said.
Meanwhile, copper stocks at SHFE and London Metal Exchange warehouses continue to slide, with SHFE inventories falling 16,224 tonnes to 256,030 tonnes as at June 8, while LME copper stocks fell 7,575 tonnes to 299,500 tonnes on Monday.
“In general, the falling stocks support copper prices. However, global trade tensions and the likelihood of an interest hike in China is likely to cap the copper rally seen last week,” Guotai Junan Futures said.
Aluminium prices, little changed with a slight upside bias, were the most resilient of the SHFE base metals complex during the morning trading session on Tuesday. The light metal has been supported by declining stock levels, but weak raw material prices are likely to put a cap on any significant gains.
The SHFE August aluminium contract price edged up 10 yuan per tonne to 14,925 yuan per tonne as at 10.28am Shanghai time.
Aluminium stocks at SHFE-listed warehouses fell 5,883 tonnes to 966,824 tonnes as at June 8.
“Falling stocks are supporting light metal prices, however, raw materials prices are under pressure,” Citic Futures Research said.
Metal Bulletin assessed Chinese alumina prices at 2,800-2,900 yuan per tonne on June 7, down from 2,900-3,000 yuan per tonne a week earlier.
Base metals prices
Currency moves and data releases