LONDON: Copper has sunk to the lowest in a week on the London Metal Exchange (LME) as a sell-off in technology stocks and higher oil prices fuelled concerns about global growth.
The red metal slipped last Friday after a disappointing earnings season for tech companies deflated the appetite for risk assets, and the prospect of renewed US military action against Iran pushed Brent crude to its highest since April.
The sharp decline in technology stocks has fuelled market scepticism regarding returns on artificial intelligence investments, leading to a retreat in risk appetite and putting downward pressure on copper, according to a note from Guangzhou Futures Co.
Industrial metals, especially copper, have been caught up in the big swings in tech stocks this year, with uncertainty over US import tariffs and volatile energy prices also at play.
Crude climbed last Friday after the Wall Street Journal reported that a top US commander had briefed President Donald Trump on military options for Iran.
Even as copper futures retreat, however, the physical market has been gripped by a bout of supply tightness after a surge of shipments to the United States.
Spot copper on the LME traded more than US$170 a tonne above benchmark three-month futures last Friday, indicating short-term market stress.
Furthermore, the Yangshan premium, which measures what Chinese importers pay above LME prices, spiked on Wednesday to more than US$200 a tonne and has remained near that level since, the highest in Fastmarkets data going back to 2017.
The steep spread reflects greater competition for the metal, both inside and outside the country.
Chinese inventories are below typical levels for this time of year, while copper smelters have pared production and threatened more cuts as they face higher costs. — Bloomberg
