Copper prices drifted lower on Wednesday after factory gate prices in China rose at its fastest pace in 12 years, raising concerns of price curbs by Beijing.
On the Comex market in New York, copper was last trading at $4.52 a pound ($9,965 a tonne), down 0.4% on the day.
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“Demand is still good over there (in China), but the extra demand that would push spot premiums higher and cause the arbitrage to open is not there,” said Anna Stablum, a commodities broker at Marex Spectron.
“But few dare to go short on the long-term supply issues and great demand expectations from “green economy”… thus, prices will be stuck around here for a bit longer.”
Socialist Pedro Castillo, who had pledged a tax overhaul on mining in Peru, was in the lead on Tuesday in the country’s presidential elections, while a proposed royalty bill and labour strikes at some of BHP Group’s mines could hinder Chilean supply.
However, Chinese May factory gate prices rose at their fastest annual pace in over 12 years on surging commodity prices, raising fear of government price curbs.
“It’s not an easy balancing act for the Chinese government to keep factory owners in business by having margins that make it worthwhile producing, while not putting too much burden on consumers where sentiment is still fragile after the global pandemic,” Stablum added.