LONDON: Copper hovered near 7-1/2 year highs on Thursday, supported by upbeat economic readings for top consumer China and vaccine developments, but analysts said the rally may have run its course for now. Three-month copper on the London Metal Exchange was up 0.1% at $7,678.50 a tonne at 1700 GMT, having hit its highest since March 2013 at $7,743 on Tuesday.
The S&P 500 and Nasdaq indexes touched all-time highs and the dollar weakened, helping metals by making them cheaper for buyers outside the United States. Copper's 76% rise since March lows has been driven by the Chinese economy's rebound from Covid-19 and, more recently, by developments in vaccines that could help the global economy bounce back.
But analysts said the upbeat news was mostly priced in and the rally may run out of steam.
"Copper needed a breather and it's taking it now. The whole industrial metals complex has rallied in recent weeks based on optimism around vaccine but most of that is priced in already," Julius Baer analyst Carsten Menke said.
Short-term traders are riding the price wave higher and positioning looks stretched, he said. The net speculative long on LME copper was at the highest since Nov 2017, at 28% of open interest as of Tuesday's close, brokerage Marex Spectron said. Meanwhile, Comex copper speculators raised their net long positions by 1,146 contracts to 80,111 in the week to Nov. 24, the US Commodity Futures Trading Commission (CFTC) said.
Chinese factory and services data this week pointed to a sustained recovery in the world's top consumer of metals and the world's second largest economy. Britain approved Pfizer Inc's Covid-19 vaccine on Wednesday and top US health officials announced plans to begin vaccinating Americans as early as mid-December.
Tin demand is recovering, helped by rising electronics sales as more people stay at home because of the Covid-19 pandemic, and is set to rise by about 6% next year, the International Tin Association forecast on Thursday. LME aluminium fell 1.7% to $2,021 a tonne, zinc added 0.3% to $2,755, lead was down 0.9% at $2,039, tin rose 0.5% to $18,875 and nickel was 0.3% lower at $15,945.
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