Copper prices fell more than 3% on Wednesday after China said it will strengthen its management of commodity supply and demand and crack down on any “unreasonable” increases in prices.
Prices for commodities such as coal, steel, iron ore and copper – of which China is the world’s biggest user – have surged this year, fuelled by rebounds in demand high liquidity levels globally as stimulus spending works its way through developed economies.
But in the past 10 days prices have sagged as China started intervening last week via its futures exchanges imposing limits on iron ore and coal and cracking down on the Shanghai copper market’s trading.
Comex July Copper fell 3.4% to settle at $US4.57 a pound ($US10,254 a tonne) in New York, in one the biggest one day falls this year. At one stage the price was down to $US4.54, which was just under the $US10,000 a tonne level.
Copper peaked at $US4.76 a pound a week ago Tuesday ($US10,724.50 a tonne on the London Metal Exchange). That’s a 4% fall, most of which came on Wednesday.
In London, the copper price was also down 3.9% to $US10,001.50 a tonne, while its intraday low of $US9,977.50 a tonne was the first time the metal fell below the $US10,000 level in 10 trading sessions.
Chinese TV reported on Wednesday that China will step up adjustments on the trade and stockpiling of commodities and reinforce inspections on both the spot and futures markets.
State broadcaster CCTV reported the cabinet meeting chaired by Premier Li Keqiang deciding to crack down on malicious trading and investigate behaviour that bids up prices.
LME zinc also fell sharply with the three-month price down by 3.9% to $US2,939 per tonne on Wednesday’s close, erasing the gains it had made on Monday and Tuesday.
And after a big rise the day before, iron ore prices shed value on Wednesday. The price of 62% Fe fines fell $US8.28 to $US216.16 a tonne; 58% Fe fines fell $US6.99 to close at $US185.71 and the price of 65% Fe fines dropped $IS10 to $US248.70 a tonne.
