Copper regained its upward momentum on Wednesday following a two-session pause, although traders noted that the reluctance of Chinese consumers to purchase at around two-year highs was limiting gains.
During official rings, three-month copper CMCU3 on the London Metal Exchange rose by 0.8% to reach $9,784 per metric ton. The price has slightly retreated from the $9,988 level reached earlier in the week due to profit-taking and producer hedging.
According to metal industry sources, the recent rally towards $10,000 has dampened the appetite for imports in China, the top consumer of copper. A trader in China mentioned that end users are rejecting the current copper price, with some clients requesting deferred deliveries in the hope that the market cools down.
Copper prices in Shanghai SCFc1 have been consistently breaking record highs in nearly every session this month. Macquarie analyst Alice Fox shared insights from an industry conference, stating that the general consensus among participants was that prices would be able to sustain these levels and continue to rise. She also highlighted varying estimates of the market deficit for 2024, with the largest projection being around 700,000 tons.
Fox further noted that Chinese stocks have not yet begun their second-quarter seasonal draw, indicating that physical supplies have not tightened.
The Yangshan premium SMM-CUYP-CN to benchmark LME prices, reflecting weaker Chinese demand for imported copper, dropped to a record low of zero on Tuesday. Another trader mentioned that plenty of traders are already offering discounts on exchange-deliverable copper brands.
The market dynamics and the impact of Chinese consumer behavior are influencing the trajectory of copper prices, with the industry closely monitoring the evolving situation.