Copper price dips below $13,000 with stockpiles, China demand in focus

Copper extended losses as investors focused on rising inventories and waning appetite from Chinese buyers, even after some dip-buying emerged earlier this week.

The decline followed a 3.2% slump in the previous session as fresh signs emerged of demand softness in the Chinese spot market, while stockpiles in London Metal Exchange warehouses in Asia jumped. Industrial metals also followed a plunge in silver, which was down nearly 14% as it struggled to find a price floor following a historic market rout.

Rising inventories suggest that traders diverted supplies bound for the US into LME warehouses after US price premiums disappeared, said Fan Rui, an analyst with Beijing-based Guoyuan Futures Co.

Premiums on Comex contracts over those on the LME, which peaked last summer, have now eased, discouraging metal flows to the US ahead of potential import tariffs.

In China, buying from fabricators and manufacturers slowed following dip-buying on Monday. Daily refined copper spot trading volumes across the country totaled 25,300 tons on Wednesday, down a second day from a three-month peak of 38,121 tons on Monday, according to consultancy Mysteel Global Ltd.

Still, there are signs of resilient demand from Chinese power grids. State Grid Corporation of China, the country’s largest copper buyer, announced a 35% jump in fixed-asset investment to 30.8 billion yuan ($4.4 billion) in January on ultra-high voltage grids and pumped storage power stations, kicking off a strong start for the year. 

This is in line with a 40% jump in its spending budget for the next five years, which could give a boost to copper demand. Investors are waiting for an annual breakdown to be released later on the investment allocations to gauge actual copper usage. 

Copper fell 1.1% to settle at $12,903 a ton in London, with other industrial metals broadly lower along with silver and gold.