Copper slips on profit-taking amid worries on Brexit, US stimulus
- Copper has been buoyed recently by bullish developments, including strong demand from China and possible supply problems.
- Typically, if you have this kind of excessively bullish mood, and with this stretched positioning in the futures market, a 10% correction would not be unusual.
LONDON: Copper slipped on Friday after touching another multi-year peak, hit by profit-taking amid worries about a US stimulus deal and a potential collapse in Brexit trade deal talks.
Global equities also slipped after prospects faded for near-term COVID-19 aid funding in the United States and the odds rose for a disorderly British exit from the European Union.
Copper has been buoyed recently by bullish developments, including strong demand from China and possible supply problems.
"So much good news has already been priced into the market. Profit-taking after such a strong rally is not surprising and we also have risk-off sentiment today in the equities market," said analyst Carsten Menke at Julius Baer in Zurich.
"Typically, if you have this kind of excessively bullish mood, and with this stretched positioning in the futures market, a 10% correction would not be unusual."
Benchmark copper on the London Metal Exchange (LME) had shed 1.3% to $7,776 a tonne by 1715 GMT after hitting $7,973.50, the highest since February 2013.
At Friday's peak, copper had soared 82% since touching 45-month lows in March during the initial stages of the COVID-19 pandemic.
"Ahead of a weekend we often see risk reduction - which will be exacerbated by the fact we have Dec (futures) expiry next week," Alastair Munro at broker Marex Spectron said in a note.
The price of nickel, mainly used for stainless steel, on the Shanghai Futures Exchange hit its upper limit after Chinese iron ore futures soared nearly 10% to an all-time high. The most active January nickel contract ended daytime trade up 4.7% at 129,250 yuan ($19,758.47) a tonne.
LME nickel, jumped to a 14-month high of $17,660 before easing 0.6% to $17,325.
Also weighing on metals markets was a firmer dollar index after three straight weeks of losses, making commodities priced in the US currency more expensive for buyers using other currencies.
Deliverable ShFE copper stocks fell by 16% from the previous week to 82,902 tonnes, the bourse said, the lowest level since October 2014.
LME aluminium fell 1.8% to $2,024 a tonne, zinc dropped 2.7% to $2,788.50, lead declined 1.6% to $2,056 while tin edged up 0.2% to $19,500.
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