Copper prices slipped overnight as political tensions between the United States and China triggered a flurry of profit-taking after the recent rally ahead of Chinese data that could shed light on demand prospects.
Benchmark copper on the London Metal Exchange was down 1.6 per cent at $US6,392 a tonne at 1608 GMT.
Prices of the industrial metal touched a two-year high of $US6,633 a tonne on Monday, a gain of more than 50 per cent since hitting four-year lows in March as economic activity and demand slumped due to coronavirus lockdowns.
“The extremity of the recent move in copper prices relative to fundamental and economic drivers has been significant. There will be some selling on rallies and trimming of long positions,” said Richard Fowler, strategist at Simpson Spence Young.
“Demand indicators from China have been strong, but further price gains from these levels are unlikely.”
Chinese numbers on urban investment and industrial output data for June are due on Thursday, expectations are for an improvement.
President Donald Trump ordered an end to Hong Kong’s special status under US law to punish China for what he called “oppressive actions” against the former British colony, prompting Beijing to warn of retaliatory sanctions.
Supporting copper prices are worries about disruptions in top producer Chile, where miners have largely maintained output despite soaring COVID-19 infections.
But pressure has been mounting for companies to strengthen safety measures, even potentially at the expense of production.
Workers at Antofagasta’s Zaldivar and Centinela copper mines in Chile have rejected pay offers and voted to strike.
Traders say some of the selling has come from producers locking in higher prices for their metal, but that most of the selling came from the investment community.
Aluminium was down 0.4 per cent at $US1,682 a tonne, zinc rose 0.3 per cent to $US2,191, lead rose 0.3 per cent to $US1,854, tin fell 0.5 per cent to $US17,230 and nickel ceded 0.4 per cent to $US13,525.