LONDON- Copper prices dropped on Friday as worries about higher interest rates and soft physical demand in China curbed the appetite of investors who had sent prices to record highs.
Three-month copper on the London Metal Exchange fell 0.8 percent to $10,331.50 per metric ton.
“The rally will likely continue in the medium to long term, but in the short term we have to respect the fundamentals,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
LME copper touched a record high of $11,104.50 a ton on Monday, driven by speculators and computer-driven funds, but is down about 3 percent on a weekly basis, on track for the worst week since the week ended Feb. 9.
“We have to accept that the latest rally has driven by financial investors, not by physical traders, in fact they’ve been selling into it, given the softness we’re seeing in Chinese data, and that didn’t improve at all this week,” Hansen added.
Physical demand in China, the world’s biggest copper consumer, has been dampened by the high prices. The usual premium to import copper into China has been flipped into a discount since mid-May.
