Copper futures for LME fell more than 3% due to tight supply

(LME) copper futures on the London Metal Exchange fell more than 3% on Thursday as supply tensions for LME eased and market participants refocused on slowing demand in China, the largest consumer.

Other base metals also fell, with nickel and aluminium falling more than 5 per cent and 4 per cent, respectively.

17:00 London time (00:00 Beijing time)), LME copper for delivery in three months fell 3.48%, or US $354.00, to close at US $9831.50 a tonne.

Tight supply helped push copper for delivery in three months up 10 per cent last week, rising to $10452.50 a tonne on Monday, not far from the all-time high of $10747.50 hit in may.

Spot copper surged to $1103 against three-month copper on Monday, the highest on record, as stocks of copper available at LME registered warehouses fell to their lowest level in at least 20 years. On Thursday, spot copper fell to $211 a tonne.

Carsten Menke, an analyst at Julius Baer, said that exchange inventories account for only a small portion of available copper stocks, and the sudden tight supply of LME does not reflect the broader market. "We see that the tight situation in the copper market is easing."

Carsten Menke also pointed to increased supply of mines and scrap copper, as well as slowing demand in China, which is grappling with power shortages and slowing economic growth.

"prices should be lower by the end of the year," he said. "

On Thursday, LME copper registered warehouse receipts were 18250 tons, up 2.1% from Wednesday, but still close to the lowest level in decades.

China's Yangshan copper premium fell to $95 a tonne from $140 a tonne on October 12, suggesting weaker Chinese demand for overseas metals.

Three-month nickel hit $21425 at one point in intraday trading, the highest level since 2014.

However, the nickel market is already showing signs of tight supply, exchange nickel inventories are falling and the premium for fast-deliverable metals is rising. An industry group says bad weather could lead to a drop in nickel production in the Philippines.

The global nickel market gap fell to 15500 tons in August from 25700 tons last month, according to (INSG), an international nickel industry research group.

In the first eight months of this year, the nickel market had a shortfall of 172200 tons, compared with a surplus of 87200 tons in the same period last year.