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Shanghai copper near 6-week low as U.S. policy concerns weigh

06/04/2021 | 12:44am EDT

HANOI, June 4 (Reuters) - Shanghai copper prices dropped to their lowest in nearly six weeks on Friday, and posted a weekly decline, on worries about tighter U.S. monetary policy after strong jobs data.

The most-traded July copper contract on the Shanghai Futures Exchange dropped as much as 3.6% to 70,470 yuan ($11,001.14) a tonne, the lowest since April 26, before edging up to close at 70,910 yuan a tonne, still down 2.9%.

The number of Americans filing new claims for unemployment benefits dropped below 400,000 last week for the first time since the COVID-19 pandemic started more than a year ago.

"Prices have been trending higher in recent months as investors bet that the huge government stimulus measures would boost demand. Consequently, any data which puts this under threat was always likely to be viewed bearishly," said ANZ analysts in a note.

U.S. non-farm payrolls data is due later on Friday and will offer more hints on the U.S. economic recovery and the likelihood of any policy changes there.

"Nevertheless, the underlying fundamentals remain positive. Supply side issues continue to percolate. This is against a broader backdrop of subdued investment that will restrict the market's ability to meet even modest growth in demand," the analysts said.

Three-month copper on the London Metal Exchange rebounded 0.2% to $9,810 a tonne by 0702 GMT, having tumbled as much as 3.8% in the previous session.

However, the contract was still below a key $10,000-a-tonne mark, and set for its biggest weekly fall since March 2020, down 4.4%.

FUNDAMENTALS

* LME aluminium fell 0.2% to $2,399.50 a tonne, zinc advanced 0.3% to $2,992.50 a tonne while ShFE nickel shed 1.9% to 131,350 yuan a tonne and ShFE zinc dropped 2% to 22,520 yuan a tonne.

* China's primary aluminium output will increase until 2024, after which recycled metal will start to claim a bigger share of plateauing consumption, research house Antaike said.

($1 = 6.4057 yuan) (Reporting by Mai Nguyen; Editing by Rashmi Aich and Devika Syamnath)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
S&P GSCI ALUMINUM INDEX 0.06% 164.4773 Delayed Quote.32.41%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.01% 6.4636 Delayed Quote.-0.48%
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