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Copper Under Pressure as China Probes Warehouses

June 12, 2014 at 23:50 by Vladimir Vyun

Copper were experiencing weakness lately due to probe into potential fraud using the metal as collateral in China. Chinese official investigate warehouses in the Qingdao port due to rumors that the metal set apart as collateral was used for other purposes or even did not exist at all. This led to speculations that the investigation will reduce usage of copper as a guarantee to secure loans, increasing supply on the market.

Some analysts argue that the current situation should not have big impact on copper prices. On one hand, optimism about global economic recovery should support the metal. On the other, concerns about potential slowdown of China’s economic growth overshadow possible consequences of the investigation.

Futures for delivery of copper in July fell 0.8 percent to settle at $3.0155 per pound on COMEX following the drop to $3.0125 — the weakest price since May 1.

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