Copper prices witnessed a notable decline, hitting a two-week low as the metals market braces for detailed announcements from a forthcoming meeting by Chinese smelters on production cuts. The drop reflects the market’s reaction to uncertainty surrounding the extent and timing of these anticipated cuts, which had previously sparked a significant rally in copper prices to an 11-month high.
The London Metal Exchange (LME) saw three-month copper fall by 0.7%, trading at $8,802 per metric ton. This downturn follows a peak of $9,164.50 reached on March 18, spurred by initial news of joint production cut plans by top Chinese smelters. However, the lack of detailed information has tempered the initial optimism, leading to the current correction.
Dan Smith, head of research at Amalgamated Metal Trading, suggests that the copper market had slightly overreacted to the initial announcements of production cuts. The upcoming meeting on March 28 is expected to provide clarity on plans for advancing maintenance schedules and reducing capacities that are currently operating at a loss.
Further complicating the picture is the projection by a state-backed research house anticipating a 3% increase in China’s copper output this year. This forecast, coupled with a strong seasonal accumulation of copper inventory in China, has contributed to dampening speculative enthusiasm.
Despite these fluctuations, the fundamental long-term outlook for copper remains strong, supported by recent data indicating a rise in Chinese industrial profits. This resilience, coupled with a broader influx of funds into commodities, suggests potential for copper prices to regain momentum over the year.
In the broader metals market, zinc also faced downward pressure, reaching its lowest price in nearly four weeks due to softening steel demand. 
