Copper prices were seen falling on Thursday, sliding from its 11-week high as investors awaits report on the US economy.
Market analysts are expecting the US gross domestic product reading to show a 0.5% contraction in the first quarter on an annual rate. The red metal has been trading higher in the recent weeks, climbing to an eleven week high on positive outlook on the demand of the metal in the US and China, the two biggest consumers, which reached $6,970 a metric ton on the London Metal Exchange on Wednesday.
“Chinese consumers were probably also concerned by the steep decline in the stockpiles at the futures exchange in Shanghai. China is the world’s largest consumer of copper (45% share), and in the second quarter of this year stockpiles in Shanghai have fallen by 50%. This steep decline is gradually raising doubts over whether the copper industry will after all be able to post the widely-expected supply surplus,’ a UniCredit research note commented.
Copper futures for delivery in three months slipped 0.7% lower to $6,899 a metric ton at the time of writing on the London Metal Exchange. The contract for July delivery dropped 0.7% to $3.153 a pound on the New York Comex.
Copper for immediate delivery traded at a $99 per ton premium to the three-month contract on Thursday, which signaled limited supply.
“Sentiment is still underpinned by a strong cash copper price, but after recent run-ups, open interest appears to have been reduced,” Mark Newson-Smith, head of metal sales at Xconnect Trading Ltd. in London, said by e-mail. “Recent volumes have been low and volatility is decreasing.”
Copper stockpiles monitored by the LME climbed 1.6% higher, the highest level since March 18 to 172,000 tons, daily data revealed.
