Copper prices dipped on Wednesday, hit by signs of weakening demand in top consumer China, while a firmer dollar made greenback-priced metals more expensive to holders of other currencies.
Copper for delivery in July was down 1% to $4.615 ($10,153 per tonne) on Wednesday afternoon on the Comex market in New York.
Yangshan copper premium fell to $30.50 a tonne, its lowest since February 2016, indicating weakening demand for imported metal into China as high copper prices deter downstream consumption.
The dollar clung to small gains from overnight as a pick-up in US manufacturing kept bets alive for a quicker normalization of Federal Reserve policy.
“China’s demand could decelerate amid tightening financial condition and slowing credit growth, but this could be mitigated by strong demand from rest of the world,” ANZ analyst Soni Kumari told Reuters.
“We see many unknown factors impacting the supply side of balance and until the market gets some clarity around it, we expect prices to hold up well,” Kumari said.
Goldman Sachs maintains its view that “copper stands at the beginning of a multi-year bull market” with the current pause reflecting temporary “investor anxiety” and “liquidation bouts”.
Managed money speculators like hedge funds, however, have reduced their net long positioning – bets on a rising copper price – on the CME copper contract by almost 30% in the space of three weeks to the lowest in nearly 10 months.
Related read: Home: Funds cut copper exposure as Chinese impetus fades
($1 = 6.3820 yuan)
(With files from Reuters)