Copper continues slide from recent record as traders fret over China demand

London copper futures fell Wednesday to their lowest in more than two months, extending a slide from an all-time high, as prices face sustained pressure from unusually weak demand in top consumer China.

Copper has slumped 14% since surging to a record $11,100/ton in May, as soft market conditions in China have slapped bullish investors with a reality check, and prices have continued to decline even after tentative signs of a demand recovery.

Consumption in China, which represents about half of global demand estimated at ~26M metric tons this year, has been soft partly due to its troubled property sector and weak manufacturing activity.

Prices will climb again "only if we have a pick-up of demand from China; otherwise, we are set to stay below $10,000," Sucden Financial's Robert Montefusco recently told Reuters. "We need better fundamentals, not just speculative buying."

According to Bloomberg, benchmark copper (HG1:COM) on the London Metal Exchange recently was little changed at $9,550.50/ton after slipping to the lowest level since April 18 in earlier trading.

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"The sharp rise of the copper price in May undermined downstream demand, leading to higher inventory," HSBC analysts including Howard Lau wrote. "However, we believe pent-up demand will gradually be released with the price correction seen from mid-June onward."

Although the global copper market was in a surplus for the first four months of the year, analysts say that will change; Citi analysts see copper demand exceeding supply this year, forecasting a deficit of ~600K metric tons over the next three years, and Goldman Sachs anticipates a shortfall approaching 500K tons in 2024 alone.

A supply crunch is not a certainty; for example, if the Cobre Panama mine - which was closed last year after a court ruling - would reopen early next year, it would tip the market into a surplus of 1.8%, Deutsche Bank said.