LONDON- Copper prices retreated on Friday on disappointment over the extent of fiscal stimulus measures announced by top metals consumer China to reboot its lacklustre economy.
Three-month copper on the London Metal Exchange (LME) was down 2.3 percent to $9,441 a metric ton after a volatile several days following the US election, including a 3.4 percent rebound on Thursday.
US Comex copper futures dropped 2.8 percent to $4.31 a lb.
The support package announced by China on Friday eases debt repayment strains for local governments and signaled further stimulus in the pipeline for its sputtering economy.
“The market clearly was disappointed; they want more from China,” said Nitesh Shah, commodity strategist at WisdomTree.
“The expectations were set very high and there were lots of warm words by officials about fiscal policy support, but markets are growing impatient.”
Investors have been worried about threats made by US President-elect Donald Trump to impose stiff tariffs on China, which could dampen metals demand.
“I’m interpreting today’s announcement as, rather than announce large stimulus preemptively, China waiting to see what trade restrictions come and keeping some dry powder aside to stimulate at that point,” Shah added. The most-traded December copper contract on the Shanghai Futures Exchange closed 1.5 percent up at 77,100 yuan ($10,753) a ton ahead of China’s stimulus announcement.
