Copper stays within reach of record highs

Copper stayed within reach of record highs on Wednesday as supply concerns persisted, but investor book-squaring undermined prices of base metals. Benchmark copper on the London Metal Exchange ended at $9,350 a tonne from a close at $9,365 on Tuesday. It earlier touched a high at $9,390.25.
The metal, used in power and construction, touched a new record of $9,392 a tonne on Tuesday, and has gained about 27 percent since the beginning of the year. "Copper is taking a little bit of a break after the high yesterday," said Jesper Dannesboe, senior commodity strategist at Societe Generale. "I would imagine (some book squaring) and volume is down, so it is natural.
"There will be a correction at some stage but we are quite bullish for next year." Industrial metals were little affected by data from the United States, the world's number one economy, which showed that economic growth was a touch higher than previously estimated in the third quarter, but below expectations. "That has been marginally negative for the markets ... it will take more bad news to trigger a big sell-off in base metals," added Dannesboe.
Supply concerns remain a focus however, after the world's No 3 copper mine, Collahuasi, scrambled to find a new route for its exports after an accident shut its Patache port terminal. Bolstering copper by stoking supply concerns, stocks of copper at LME warehouses have trended lower since February last year, when they hit 555,075 tonnes, their highest level since October 2003.
However, stocks data has been less supportive recently, with inventories having trended higher since early December. They last rose 1,225 tonnes to 363,950 tonnes, their highest since early November. A dominant position controlling 80-90 percent of stock warrants on London Metal Exchange copper slipped to 50-80 percent, latest data showed. Investors concerned about market tightness have eyed a dominant position in copper since November.
Worries about supplies in the near term have pushed the metal into a $50 a tonne backwardation - premium for cash material over the three-month contract - compared with a discount of $20 a tonne in late October. However, this backwardation has eased from $70 on December 13. Aluminium closed at $2,462 a tonne from $2,435 and zinc ended at $2,330 from $2,328 a tonne. "Aluminium has been the busiest metal on the complex this morning, with the metal building on the sharp rally on Tuesday afternoon to trade back above $2,450 this morning with the move exacerbated by short covering," Standard Bank said in a note. Battery material lead was ended at $2,440 a tonne from $2,434 a tonne. On lead there was a backwardation of $9, reflecting a premium for cash lead over the three-month contract, the highest since April 2009 and versus a contango of $23 in early December.
LME lead stocks - which have steadily risen since late 2008 - gained 300 tonnes to 207,800 tonnes. Tin closed at $26,825 a tonne from $26,890 a tonne, within reach of a record high of $27,500 a tonne hit on November 10. Nickel ended at $24,050 a tonne from $24,625 a tonne.