Copper and other metals fell overnight after a gloomy outlook for the US economy and fresh concerns over a second wave of COVID-19 infections cast doubt over demand.
The US Federal Reserve signalled plans for years of exceptional support to help the world’s largest economy recover from the pandemic, with policymakers projecting major contractions in the economy.
Benchmark copper on the London Metal Exchange (LME) was down 2.8 per cent to $US5,740 a tonne by 1630 GMT, having touched a high of $US5,928 in early trade.
Broker Marex Spectron said a technical retracement in copper and aluminium was overdue.
Copper has rallied about 30 per cent since March lows and is trading at its highest since January.
ING analyst Wenyu Yao said there was an element of “irrational sentiment” in the rally, as it was based on hopes for a V-shaped economic recovery that was not yet evident in the data.
“There are fresh concerns on second COVID-19 waves, especially in the US, with cases in states that re-opened earlier starting to surge again, which poured cold water on market sentiment,” she added.
Total US coronavirus cases surpassed two million on Wednesday, according to a Reuters tally, with new infections rising slightly after five weeks of declines.
China’s auto sales in May gained for a second consecutive month, while broader credit growth quickened as the world’s second largest economy regained its footing.
Capital Economics forecasts higher metals prices by the end of this year as growth in Chinese demand helps to offset persistent softness in demand elsewhere, said its chief commodities economist Caroline Bain.
Unionised workers at Chile’s top copper miner Codelco said they were considering walking off the job at some sites to implement a self-imposed quarantine after a member died from COVID-19.
LME aluminium shed 2 per cent to $US1,595 per tonne, zinc eased 1.4 per cent to $US1,993, lead lost 0.8 per cent to $US1,737, while tin fell 1.4 per cent to $US16,940 and nickel dropped 2.8 per cent to $US12,645.