RTRS: LME copper extends slide on worries rally overdone
SINGAPORE - London copper futures fell more than half a per cent, extending losses after the market failed to hold a rally to a 20-month peak in the previous session on worries that growth in prices has outpaced demand.
Robust import figures from China, the world's top metals consumer, sent copper to a 20-month high of $US8,043.75 on Monday.
Market attention is now turning to a host of Chinese macro numbers due around April 15, including GDP.
But analysts worry a strong round of numbers may derail the commodities juggernaut by forcing Beijing to act more quickly and more vigorously to cool growth rates and stem inflation.
"We wonder if markets are fully priced right now. If demand recovery doesn't live up to expectations we may see prices dip," ANZ's senior commodities analyst Mark Pervan said.
"Cheap credit looking for a short-term home found it in commodities.
But that could easily exit if the cost of credit increases or other markets look more attractive."
Three-month copper on the London Metal Exchange fell $US47.75 to $US7,857.25 by 1758 AEST, having dipped as low as $US7,823 in early trading.
Benchmark third-month Shanghai copper also fell, slipping 0.7 per cent to 62,130 yuan.
"Copper tried and failed to hold onto gains as the dollar steadied versus the euro, and it looks like the bulls gave up on trying to sustain the move above $US8,000," a trader in Hong Kong said.
"We have a second opportunity to crack the upside this week with Chinese GDP data. But it feels like there is a real lack of conviction when prices go above $US8,000."
Aluminium fell $US20.50 to $US2,396.50, but the lightweight metal was back in the limelight after UC RUSAL confirmed plans first reported in September that it wanted to launch a physically-backed exchange traded fund.
"Aluminium rose on the RUSAL ETF reports, but I don't see it changing the market fundamentals," the Hong Kong trader said.
"We have known about an aluminium ETF plan for a while now, even the million tonnes talked of isn't really new so this doesn't do anything to shake my fairly pessimistic outlook for the market."
