Copper is down slightly today on news that China's factory sector shrank in July, and analysts are speculating that it has further to fall.
The metal has tripled in value over the last three years amid soaring Chinese demand.
But it is set for a temporary correction according to UBS. In a note out this morning, it suggests the metal could "fall at least 10% this quarter, and that there are significant downside risks from there."
The analysts add:
There's one indicator on commodities we trust above all others. That's the CRB Rind, which is an index of largely non exchange traded raw materials. And it's the most reliable indicator of trends in the willingness of industrial companies to pay for raw materials. Since June it's turned down while copper his bounced. For us this is the strongest argument yet for selling copper.
The metal was trading at $9,660 a tonne at lunchtime, down around 1% from $9,755 at Wednesday's close.
