SINGAPORE: London copper edged higher on Thursday, keeping physical demand in Asia in check with no sign of a Chinese re-stocking spree following the Lunar New Year holiday.
Three-month copper on the London Metal Exchange rose 0.5 percent to $9,981 a tonne by 0242 GMT, having touched a record high of $10,160 at the start of the week.
Technically, copper was seen as bearish. Reuters analysts Wang Tao said copper would end its current rebound around $9,996 per tonne and return to Wednesday's low at $9,870, based on its wave pattern and a Fibonacci projection analysis.
A downtrend was solid towards $9,794, the 100 percent Fibonacci projection level, with a longer term target at $9,300, he said.
The most active futures in Shanghai also rose half a percent to 75,880 yuan.
Merchants said physical copper trade in Asia had ground to a halt under the weight of record prices, and with inventories in bonded warehouses in Shanghai equivalent to at least those in LME storage, Chinese consumers were in no rush to restock.
"One thing is certain, Chinese consumers have access to plenty of material so are unlikely to plunder the international market anytime soon," a trader said.
Abundance of domestic supply also showed up in the arbitrage between Chinese and international prices, with Shanghai trading at a discount of around 1,600 yuan.
However, in the longer term, copper remained positive, supported by strong demand. "The copper mining industry will not meet global demand for 2011 or next year because demand is growing faster than supply. The copper market is facing a widening deficit until new supply comes on stream in late 2013, "said Walter de Wet, Standard Bank's Head of Commodity Research.
"After last year's deficit, we project the deficit to grow to 385,000 metric tonnes for 2011 and 562,000 for 2012, so clearly demand is growing faster than supply and will remain strong until 2013. This may result in global reported stocks drawing down to less than one week of consumption by end-2012."
The amount of copper held to back the physical copper exchange traded product dropped by one third so far in February, the latest data from ETF Securities showed.
In the first net redemption for the products since their December launch, holdings of copper fell by 720 tonnes or 35 percent to 1,350 tonnes by February 9, from 2,070 tonnes at the end of January.
LME zinc rose 0.4 percent to $2,466.75, while Shanghai counterpart rose almost 1 percent to 19,425 yuan.
Minerals shipments at Peru's main port were normal on Wednesday after workers ended a strike for better benefits at the government-operated Port of Callao, union leader Leopoldo Ortiz said.
Navy sailors had been charged with loading and unloading cargo ships this week during the strike, but workers said 15 ships, primarily carrying zinc and lead, opted to bypass Callao, uncertain the military was a suitable replacement.
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