Shanghai copper fell for a fifth day yesterday, and London metal dropped for a fourth day running, trading at its lowest in more than week, under pressure from worries the year to date surge has run ahead of fundamentals.
Mixed economic data, including a decline in US industrial output, and disappointing sales from US electronics giant, Best Buy, fed worries about an anemic recovery, weighing on equity markets and souring sentiment after positive housing data.
Shanghai's benchmark third month copper futures contract fell 1.6 per cent to 38,710 yuan a tonne. Shanghai copper has fallen for five sessions running, its longest string of losses since the Lunar New Year in January.
In London, copper for three-month delivery fell $40, or 0.8 per cent, to $4,940 a metric tonne on the London Metal Exchange (LME). The contract slid as much as 1.6 per cent to $4,900, the lowest intraday price since June 5. Copper for July delivery lost 0.5 per cent to $2.2445 a pound on the New York Mercantile Exchange's Comex division.
Metals markets have surged 70 per cent in some cases in the year to date, leading some analysts to worry they have over-
extended themselves and need to correct.
"In the next few weeks we may see further corrections from these higher levels. From a fundamental view, we need this for investors to check the reality of demand," said Judy Zhu, commodities analyst at Standard Chartered in Shanghai.
Among other LME metals for three-month delivery, aluminum fell $19.75, or 1.2 per cent, to $1,590.25 a tonne. Shanghai metal dropped 35 yuan to 13,300 yuan. LME stocks of aluminium jumped 47,225 tonnes to a record above 4.3 million tonnes.
Reduced output and more stable consumption will bring global supplies of the metal "close" to balance with demand by the end of this year, Morgan Stanley analyst Mark Liinamaa said.
The lightweight metal, mainly used in the automotive, packaging and construction, is up 3.3 per cent this year.
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