LONDON: Copper fell to a four-week low on Monday as inventories of the metal posted their biggest one-day rise in 15 years as demand quietened into year-end, while lead and zinc slid on bets their earlier gains had become overstretched.
Copper inventories in warehouses registered with the London Metal Exchange (LME) rose 38,400 tonnes on Friday, exchange data showed, their biggest daily increase since July 2001. That took them to their highest in around two months.
Stocks have surged 62 percent from their early December low.
Three-month copper on the LME was down 1.2 percent at $5,565 a tonne in official midday trading, off an earlier low of $5,561.50. Prices rose to a 17-month peak of $6,045.50 a tonne last month, but have since succumbed to selling.
"Profit-taking is the main trend here," Societe Generale analyst Robin Bhar said. "At the end of the year, physical markets are quieter than would normally be the case, reflected in strong stock increases, particularly in copper."
"Given the increase we had in November, it is only logical to see some price correction. The metals are still fairly richly valued compared to their supply and demand fundamentals."
The latest US Commodity Futures Trading Commission data showed that in the week to last Tuesday, hedge funds and money managers raised their net long position in copper futures and options to a record for the sixth straight week.
Much of November's rally was driven by a perception that Donald Trump's election as US president would lead to increased US infrastructure spending. It has since unravelled that rally as the market digested the implications for demand.
"Even a massive increase in infrastructure
e-related copper demand in the United States would hardly matter on a global scale, signalling to us that prices were primarily driven by improving sentiment rather than improving fundamentals," Julius Baer said in a note on the outlook for next year.
While neither was traded in official rings, LME zinc was the biggest faller among the base metals, last bid down 2.9 percent at $2,650 a tonne, followed by lead, last bid 2 percent lower at $2,200 a tonne.
They have been two of the best performing base metals this year, with zinc up 65 percent and lead up by nearly a quarter. That has led to concerns that their gains have become overstretched, analysts said.
Aluminium, also untraded in official rings, was last bid down 0.3 percent at $1,713 a tonne.
Nickel was 2.4 percent lower in official trading at $10,900 a tonne, while tin was 0.7 percent lower at $21,075 a tonne.
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