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- Copper tumbled 5% to a seven-week low on Tuesday amid concerns that China will release its stockpiles.
- The sell-off was accelerated when prices dipped below the 50-day moving average, analysts told Reuters.
- Copper on Tuesday was trading at $9,955 a ton Tuesday, after peaking to its all-time high on May 10.
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The price of copper tumbled 5% to a seven-week low on Tuesday amid concerns that China will gradually release its stockpiles in the coming months.
Copper on Tuesday was trading lower by 0.74% at $9,955 a ton as of 1:35 p.m. ET. It peaked at $10,747 to a record high on May 10.
The sell-off was accelerated when prices dipped below the 50-day moving average of around $9,781. Analysts in China told Reuters that the state plans to release its state reserves not only of copper but also of aluminum and zinc.
In May, China's State Reserve Bureau said it would ensure that there is an adequate supply of the commodity, the Wall Street Journal reported. The country consumes half of the world's supply of copper.
Prices of commodities such as metals and oil typically spike when inflation is accelerating, but China's move is looming for copper investors.
Many analysts, including Cheryl Smith, economist and portfolio manager at Trillium Asset Management, believe that the current bout of inflation is transitory.
Smith defended the dovish stance of the Federal Reserve, whose officials are in a two-day meeting Tuesday and Wednesday.
"The recent CPI and PPI readings showed considerable dispersion, with significant price increases generated by supply chain issues for segments heavily affected by Covid-related disruptions, while prices in less-Covid sensitive segments remained quiescent," she said.
This, Smith explained, is why prices for commodities such as lumber and copper have declined from their peaks.