Copper drifts higher, but holds below record with investors wary

LONDON: Copper prices rose on Tuesday, but hovered well below record highs hit in the previous session as investors locked in profits and were wary about end-users holding back purchases in a buoyant market.

Benchmark three-month copper on the London Metal Exchange was up 1.5% at $12,405 a metric ton by 1030 GMT, having hit a record of $12,960 on Monday.

LME copper has surged 41% this year, lifted by worries about mine disruptions constricting supply, a weaker dollar and heavy buying by speculators.

“Base metals are likely to remain headline- and flow-driven, with the upside vulnerable to profit-taking until liquidity improves in early January,” analysts at Sucden Financial said in a note.

Copper prices in China declined as weaker Chinese demand weighed on the market.

The most-traded contract on the Shanghai Futures Exchange closed daytime trading down 2.4% at 98,090 yuan ($14,031.50) per ton.

The Yangshan copper premium, a gauge of Chinese appetite for imported copper, declined to $53 a ton on Monday, down from $55 previously but still an improvement from below $40 since mid-October.

Copper also took a hit from investors’ broader shift to a risk-off stance. Both gold and silver saw a reversal from record highs on Monday.

LME nickel jumped 4.8% to $16,570 a ton, boosted by short-covering amid concerns about reduced output from top producer Indonesia. It touched an intraday peak of $16,700, the strongest since March.

The Indonesian government plans to cut mining output quotas in order to support commodity prices, a minister said on Tuesday.

The most-active nickel contract in Shanghai was up 3.9% at 132,390 yuan a ton, after touching a nine-month high of 134,480 yuan.

Among other LME metals, aluminium rose 0.2% to $2,959 a ton, zinc gained 0.8% to $3,112, lead advanced 0.9% to $2,022.50 and tin climbed 1.3% to

$41,255.