(ATF) Copper prices marked their first weekly decline since the start of April over rising inflation fears and a concern from China over high commodity prices.
Benchmark Asian copper prices on the London Metal Exchange closed at $10,455.33 a tonne on Friday, having scaled a record high of $10,747.50 on Monday.
Many analysts expect the metal, used in construction and power, to rise further as the global economy rebounds and moves from fossil fuels to copper-intensive electrification.
“Supply is relatively tight while demand keeps expanding,” WisdomTree analyst Nitesh Shah told Reuters. “I think it will start going up again.”
Prices of several metals, including copper and iron ore, are easing as Beijing tries to cool a rally in commodities. Iron ore futures plunged as much as 11% in Singapore and steel rebar also fell.
Surging raw material costs sparked the biggest jump in Chinese factory-gate prices in more than three years in April.
“China may want commodity prices to stabilise but its environmental and economic goals suggest demand will remain strong,” said Yao Wenyu, senior commodities strategist at ING.
“Chinese officials have repeatedly called for stability in commodities prices and as the world’s largest metals consumer, China reserves the right to intervene in the commodities markets.”
Copper and iron ore have been among the biggest gainers in a yearlong rally in commodities as the coronavirus pandemic created supply bottlenecks.
Global decarbonisation has also transformed the long-term outlook for metals such as copper.
“But stabilising prices of copper, aluminium, and steel will be difficult when the country is also trying to reduce emissions and achieve carbon neutrality across major industries, and simultaneously maintain medium to high speed economic growth,” Yao said.
With reporting by Reuters