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Copper nears 2-month low as China says to sell reserves

06/16/2021 | 01:35am EDT

HANOI, June 16 (Reuters) - Copper prices fell to their lowest in nearly two months on Wednesday, weighed down by supply pressure after top consumer China announced a plan to sell its national reserves of the metal to stabilise prices.

Three-month copper on the London Metal Exchange dropped by as much as 0.8% to $9,489 a tonne, its lowest since April 23.

The most-traded July copper contract on the Shanghai Futures Exchange fell by as much as 2.8% to 68,380 yuan ($10,685.04) a tonne before paring losses to close down 2.7% at 68,450 yuan a tonne.

China will release its national reserves of copper, aluminium and zinc in batches in the near term to nonferrous processing and manufacturing firms via public bidding, the National Food and Strategic Reserves Administration said without giving a specific number for each metal.

Last month, copper prices hit record highs on both the LME and ShFE, while ShFE aluminium scaled its highest since 2010 and ShFE zinc jumped to a level unseen since 2007.

In the ferrous complex, steel rebar and iron ore futures also hit record highs in May.

A metals trader said the news was likely to have a limited impact on prices as it had to an extent been priced in.

Expectations of U.S. policy tightening to control rising inflation, which could lead to fund outflows from the commodity market, also subdued prices. Investors are awaiting the outcome of the Federal Reserve's policy meeting later in the day.

FUNDAMENTALS

* LME nickel fell 1.4% to $17,500 a tonne at 0734 GMT, tin shed 1.1% to $31,120 a tonne, ShFE nickel dropped to a near three-week low of 127,800 yuan a tonne and ShFE aluminium declined 1.8% to 18,590 yuan a tonne.

* LME copper inventories <MCUSTX-TOTAL> rose to their highest since April 29 at 140,625 tonnes, while ShFE copper stocks <CU-STX-SGH> were last at 180,967 tonnes, their lowest since March 12.

* Yangshan copper premium <SMM-CUYP-CN> fell to $21 a tonne, its lowest since February 2016 and 81% lower than May 2020, indicating weak demand for imported metal into top consumer China.

* For the top stories in metals and other news, click or

($1 = 6.3996 yuan)

(Reporting by Mai Nguyen; Editing by Subhranshu Sahu and Barbara Lewis)


© Reuters 2021
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