Prices of copper – the industrial metal used in everything from cars to houses – have declined this week, heading towards a one-month low, with analysts concerned the sell-off could continue and become worse than the recent March fall.
The drop in price has centered on reports of an investigation at China’s northeastern port of Qingdao, which has raised fears that large quantities of the metal could flood the market. Three-month copper on the London Metal Exchange edged lower by 0.35 percent on Thursday morning to $6,666 per tonne, close to levels not seen since early May. Prices on Asian benchmarks also fell lower during the overnight session.
In China, the world’s biggest consumer of the metal, cooper is used as collateral in financial deals as well as for manufacturing purposes. China’s copper inventories have increased to around 800 kilotonnes in 2014 of which around 300-400 kilotonnes is held in financing deals, according to figures from Bank of America Merrill Lynch. Officials in Qingdao are investigating whether some financing deals have been made using copper that didn’t actually not exist.
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