Copper traded sharply lower on Thursday, giving up early gains spurred by top consumer China’s return to the market, as soaring oil prices weighed on the demand outlook for industrial metals.
Benchmark three-month copper on the London Metal Exchange was down 1.2% at US$14,300.50 a metric ton as of 16:00 GMT, having earlier touched its strongest since September 25 at US$14,646.50.
Early expectations that Chinese buyers could restock after the country’s week-long holiday lent support to prices, said CRU principal analyst Craig Lang, noting low market stocks and mounting mine supply risks.
The Yangshan premium, a gauge of China’s appetite for copper imports, rose 5% from its last pre-holiday assessment to US$125 a ton, its highest since November 2022.
However, a 5.7% increase in Brent crude oil prices — the biggest daily jump in almost a month — after an increase in attacks on shipping in the war-hit Middle East fanned concerns of inflation and weaker economic growth.
Global shares slid as strains in sovereign bond markets were aggravated by the oil price rise, before paring losses after President Donald Trump said the US would not attack Iran before the US midterm elections in November.
The negative market sentiment outweighed concerns that strikes at copper mines in Chile and the Philippines could take more supply out of the market, with LME copper stocks already thin.
The cash LME copper contract was trading at a premium of US$98 a ton over the three-month forward, up from a premium of about US$89 on Wednesday, indicating growing near-term supply tightness.
Elsewhere, aluminium fell 2.3% to US$3,044 a ton, touching a three-month low within a whisker of its weakest level since February, while zinc slipped 1.4% to US$3,709 and lead lost 1.9% to US$1,861.
Nickel shed 1.1% to US$15,550, while tin was hit hardest, dropping 5.5% to US$51,300 after touching its lowest since September 15 at US$51,255 earlier in the session.
(Reporting by Tom Daly, Additional reporting by Solomon Cefai and Polina Devitt; Editing by David Goodman and Shilpi Majumdar)
Main image: Shanghai Futures Exchange
