Copper dropped from a two-week high on Wednesday buoyed by the continued increase in inventories and the fall in China premiums, which reflects the amount buyers are willing to pay on top of the LME copper price for physical delivery.
At the London Metal Exchange (LME), Benchmark copper dropped 1.3% to $8,933 a tonne by 1650 GMT. In the previous session, the metal had touched $9,104, its highest level since March 23.
Copper inventories in LME-registered warehouses surged from 74,200 tonnes at the end of February to 150,325 tonnes. Stocks also moved higher elsewhere.
Copper premium reach 5 month low
The Yangshan copper premium SMM-CUYP-CN dropped to $54 a tonne, its lowest since November, indicating the weakening demand for imports into China. The premium indicates the amount buyers are willing to pay on top of the LME copper price for physical delivery.
However, analysts said that in the second quarter, the demand would be seasonally stronger.
Broker Marex Spectron said that the net long position in LME copper declined from 62% at the end of February to 22% of open interest, indicating the waning investor interest in copper. The spreads also show a bleaker outlook for the red metal, with the LME cash copper contract declining to $3.50 a tonne premium over the three-month contract compared with $62.30 in February.