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Shanghai - Copper dropped for a second day, declining from the highest level in a month, as the cash to three-months spread fell to its lowest in more than a year, signaling increased supply or reduced demand.
Copper lost as much as 0.6% to $4 746 a metric ton on the London Metal Exchange before trading at $4 773 at 08:04. The metal closed at $4 788 on Friday to cap the biggest weekly advance in two months. The spread on the LME, or the spot discount to the three-month price, widened on Monday to the most since July 2015.
The metal used in cables and wiring has wiped out almost all its gains this year, lagging behind other base metals as production continues to outpace demand. Data on Monday showed that China, the top producer, increased copper output in August to the highest in six months, exacerbating excess supply, according to Jia Zheng, a trader with Shanghai Minghong Investment Management.
“The weakening spread shows the market is pretty bearish at the moment,” Jia said by phone from Shanghai, “On the spot market, the premium is hardly climbing in the autumn high season. On the supply side, domestic production keeps rising.”
In Shanghai, copper was little changed at $5 583 a ton as open interest slumped to the lowest in three years, signaling that investors have shifted their focus from the metal, according to Jia.
Other metals news:
Rio Tinto is becoming more
optimistic on the outlook for demand in China after recent data pointed
to a pickup in the construction market, viewing copper as likely to be
the first metal to emerge from the “twilight zone”, according to CEO
Jean-Sebastien Jacques.
LME nickel added 0.6%, after surging 4.4% on Monday as the
Philippines said it may suspend more mines after the completion of an audit.
