Copper slipped after initially extending gains above $10,200 a ton as traders turned their attention to demand conditions in China.
A rebound in Chinese manufacturing activity is bolstering hope that the recent economic upturn in the world’s top metals-consuming nation can be sustained. China’s ruling Communist Party also vowed to examine measures to tackle the nation’s excess housing inventory, signaling stepped-up help for a protracted property crisis.
Copper has surged 14% in April so far as a historic squeeze in the supply of mined ore risks tilting the market into a major deficit and investors turn more upbeat on the prospects for demand.
The official manufacturing purchasing manager index was 50.4 in April, according to Chinese government data announced Tuesday. That’s slightly better than forecast in a Bloomberg survey and marks the second straight month factory activity expanded.
Still, in the near term, a usual seasonal pickup in Chinese demand is delayed because the rapid surge in copper prices deterred buying from fabricators, which are struggling to pass on rising costs to consumers. Premiums paid on both imported and domestic copper cargoes have collapsed.
Copper hit a fresh two-year high of $10,208 a ton before easing to trade 0.4% lower at $10,100.50 on the London Metal Exchange as of 11:22 a.m. local time. Most other metals were lower, as well.
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