LONDON: Copper prices fell on Tuesday, pulling the rest of the metals complex lower, as traders took profits made after a week-long rally fuelled by Donald Trump's US election victory.
Three-month LME copper fell 3.2 percent to a one-week low of $5,360 a tonne and traded 2.3 percent lower at $5,440 in official rings. The decline is a reversal of the nearly 8 percent leap in intraday trading on Friday to its highest since June 2015.
"A drop below $5,000 is likely because nothing has fundamentally changed ... the picture for copper had already improved before the US election on positive US and Chinese economic data," Commerzbank analyst Daniel Briesemann said. "But the wave of speculative trade that took over the market last week on expectations for a US infrastructure push is now settling and copper will probably still be in a supply surplus next year."
Copper recorded its biggest weekly gains last week since 2011 with an 11.2 percent rise, a rally that was also buoyed by Trump's promises of infrastructure spending, which potentially could lead to higher consumption of industrial raw materials. The most-traded copper contract on the Shanghai Futures Exchange settled 4.3 percent down at 43,670 yuan ($6,371) a tonne.
Hedge funds and money managers raised their net long positions in COMEX copper to the highest on record at 59,263 lots in the week to Nov. 8, US Commodity Futures Trading Commission data showed on Monday. The metals complex was also pressured by general strength in the dollar, which earlier traded near its strongest since early 2003 against a basket of currencies, before steadying.
Three-month LME zinc dropped 1.9 percent in offical trading to $2,558 a tonne, retreating from a fresh high since January 2010 at $2,684 reached earlier.
The metal is up around 60 percent this year. The most-traded zinc contract on the Shanghai Futures Exchange rose as much as 6.3 percent on expectations of a pick-up in Chinese demand for steel alloys.
It ended 1.2 percent higher at 21,115 yuan ($3,080). Tin, which did not trade in offical rings, was bid at $20,350, down 2.3 percent, after touching a near one-month low of $19,840 a tonne. Nickel fell 0.4 percent to $11,220 a tonne in official rings, while lead was bid at $2,168 a tonne, down 1.2 percent.
The decline in base metals, seen as a proxy for industrial activity in China, was mirrored in steel-dependent iron ore markets. Iron ore futures in Asia dropped sharply on Tuesday, after a frenzied rally over the past week to multi-year highs, as weaker Chinese steel prices tamed bullish bets on the raw material.
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