Industrial metals declined on Wednesday as China’s plan to bring down coal prices eased worries about metals supply shortage and investors booked profits after recent strong gains.
Three-month copper on the London Metal Exchange fell 1.3% to $10,015 a tonne by 0737 GMT, while the most-traded November copper contract on the Shanghai Futures Exchange dropped 2.5% to 73,380 yuan ($11,476.92) a tonne.
ShFE zinc tumbled 6.5% to 25,415 yuan a tonne, ShFE aluminum shed 6.3% to 22,805 yuan a tonne, ShFE tin dropped 2% to 283,520 yuan a tonne and LME aluminum fell 1.6% to $3,063 a tonne.
China’s state planner said on Tuesday it was studying ways of intervening in high coal prices and would take all necessary measures to bring them back to a reasonable range.
The most-active Dalian coking coal contract and coke futures both dropped 9% on Wednesday, while China’s coal futures fell 8% to their downward limit in night trading on Tuesday.
The sharp drop in coal prices had an “emotional impact” on non-ferrous products, said Huatai Futures in a report, adding that a build in zinc inventories also suppressed prices of the metal used in galvanizing steel.
ShFE zinc stocks rose to their highest since June 4 of 71,444 tonnes, and LME inventories of the metal rose for the first time since Sept. 10 on Monday, latest exchange data showed.
The power crunch in China and electricity price hikes in Europe have raised concerns of supply shortages in base metals, some of which are already seeing multi-year low inventories.
Zinc surged 20.4%, copper jumped 9.8% and aluminum gained 6.9% on the LME last week.
FUNDAMENTALS
* The London Metal Exchange said on Tuesday it would amend lending rules and implement a backwardation limit and delivery deferral mechanism for copper trading with immediate effect.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; Editing by Subhranshu Sahu and Uttaresh.V and Louise Heavens)