(Bloomberg) -- Copper headed for its worst weekly loss since 2022 and iron ore extended a slump toward US$100 a ton as a policy meeting in China failed to lay out more stimulus to shore up metals demand.
Futures for the red metal have fallen by over five per cent in London this week amid a broad retreat that’s also battered aluminum, tin and nickel. The complex was also dragged lower on Friday by a shift away from risk assets and a stronger U.S. dollar.
Copper prices have retreated from a record hit in May on concerns about the strength of demand in China, where growth was the slowest in five quarters in the three months to June. The outcome of the Third Plenum, a key conclave of Communist Party officials in Beijing this week, has so far showed few signs of major steps to boost demand or arrest a long-running property slump.
“A lack of major policy shift in China weighed on sentiment,” ANZ Group Holdings Ltd. analysts including Daniel Hynes said in a note. “That left investors disappointed that there wasn’t greater focus on tackling structural issues in the economy, such as the beleaguered property sector.”
In sign of weak demand, global copper inventories have ballooned in recent months. Stockpiles held in warehouses tracked by the London Metal Exchange have more than doubled since mid-May to hit the highest since September 2021, with most of the build-up seen in Asian sheds.
A further 4,000 tons of cathodes were delivered into LME warehouses in South Korea and Taiwan, exchange data showed on Friday. That’s happening as premiums for physical copper cathodes being imported into China remain resolutely low.
Metals traders, meanwhile, are also monitoring the fallout from a 7.4 magnitude earthquake that struck in Chile, 45 kilometers (28 miles) outside San Pedro de Atacama in the country’s northern copper and lithium mining region.
Copper was 0.3 per cent lower at $9,360 a ton on the LME at 10:55 a.m. in London, dropping for fifth day. Aluminum has slumped about 4.5 per cent this week, while tin has retreated by over eight per cent. Miners shares fell in Australia, with BHP Group Ltd. closing at the lowest since late 2022.
Iron ore dropped one per cent to $103.70 a ton in Singapore, down 3.3 per cent this week. In addition to the China demand outlook, losses have also been driven by reports of higher production from the world’s top miners.
With assistance from Audrey Wan
©2024 Bloomberg L.P.
