Copper fell on Thursday as inventories trended higher and year-end book-squaring also pressured the market, but expectations of market tightness in 2011 kept the metal's price near record highs. Benchmark copper for three-month delivery on the London Metal Exchange closed at $9,300 a tonne from $9,350 at Wednesday's close and versus a session low of $9,205.
The metal used in power and construction held near a record high of $9,392 a tonne touched on Tuesday. "You've got to have a breather sometimes, even in this hyperventilating market," Stephen Briggs of BNP Paribas said. Dampening sentiment, LME copper inventories have seen some hefty gains in December, last rising 3,775 tonnes to near two-month highs at 367,725 tonnes.
The metal pared some losses as the dollar turned negative versus a major currency basket, making metals cheaper for non-US investors. A flurry of US data reinforced views of solid economic growth. New home sales and prices edged up in November, while consumer sentiment rose in December to its highest level since June.
Concern about supplies in the near term have pushed the metal into a $48 a tonne backwardation - premium for cash material over the three-month contract - compared with a discount of about $39 a tonne at the end of March. Also, a dominant position controlling 80-90 percent of stock warrants and cash contracts on London Metal Exchange copper has risen to more than 90 percent, latest data showed. Aluminium closed at $2,432 a tonne versus $2,462. LME stocks for the metal, used in transport and packaging, jumped 5,775 tonnes to 4.28 million tonnes. A large portion of those aluminium stocks are tied up in finance deals.
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