Copper pulls back from record on concern about physical demand

LONDON: Copper prices hit a record on Wednesday on persistent demand from speculative funds, but some investors were wary that the high prices would deter buying by industrial users.

Benchmark three-month copper on the London Metal Exchange slipped 0.1% to $13,176.50 per metric ton by 1030 GMT, after touching a record of $13,407.

LME copper has gained 44% over the past 12 months, buoyed by disruptions at mines, worries about deficits this year and a flow of metal to the U.S. ahead of potential tariffs that are tightening supply elsewhere.

“With all these concerns about debasement, financial risks and Fed independence, this demand for hard assets is just sensational,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

“There’s a limit in industrial metals where we hit a wall in terms of potential demand destruction. I just don’t know where that level is and whether it’s here.”

Looking at technical signals, a close below $13,000 would spur a reaction to the downside, he added.

Copper demand in China seemed to be stable, with potential stocking ahead of the Lunar New Year holiday, Hansen said.

The most-traded copper contract on the Shanghai Futures Exchange closed daytime trade 0.9% higher at 104,120 yuan ($14,931.88) per ton after hitting an all-time high of 105,650 yuan.

Tin prices in both Shanghai and London hit record highs, with gains of 24% and 30% respectively so far in January, as investors bet on rapid growth in demand for the metal used to make semiconductors on the back of the artificial intelligence boom.

SHFE tin surged 8% to hit the upper price limit at 413,170 yuan, while LME tin jumped 4.1% to $51,550.

“We do not see any dramatic change in tin’s fundamentals. (The) price rally has been powered by speculative trading,” said Jing Xiao, an analyst at broker SDIC Futures.

Tom Langston at the International Tin Association agreed that the supply-demand metrics have not shifted, noting that fund interest on the LME were at record levels.

Among other metals, LME aluminium edged up 0.1% to $3,200 a ton, zinc rose 1% to $3,232, lead added 0.4% to $2,069 and nickel advanced 1.7% to $17,975.