Copper price plunges on China’s pledge to bring down coal prices

The copper price fell on Wednesday as China’s pledge to bring down coal prices eased worries about a supply disruption in metals and investors booked profits after recent strong gains.

CASH copper on the London Metal Exchange plunged 7.2% overnight, erasing Monday’s gains.

[Click here for an interactive chart of copper prices]

The Chinese National Development and Reform Commission said it is evaluating measures to intervene in prices and has “zero tolerance” for those spreading false information or collusion in the market.

The agency added that China planned to raise its coal output to 12 million tonnes a day and give the fuel priority for deliveries through ports and over railroads.

The power crunch in China and electricity price hikes in Europe have raised concerns of supply shortages in base metals, some of which are already seeing multi-year low inventories.

Last week, the zinc price surged 20.4%, copper gained 9.8% and aluminum advanced 6.9%.

Copper for delivery in December fell 1.4% on the Comex market in New York on Wednesday, touching $4.6360 per pound ($10,199 per tonne).

The most-traded November copper contract on the Shanghai Futures Exchange dropped 3.2% to 72,910 yuan ($11,406.80) a tonne. Zinc tumbled 6.8% to 25,320 yuan a tonne ($3,962.44).

(With files from Reuters and Bloomberg)