Copper's rally may be back on as prices steady above $9,000

LONDON: Copper steadied above $9,000 a tonne on Tuesday, reducing fears that prices could correct lower after a breakneck rally powered by expectations of tight supply and expanding demand.

Benchmark copper on the London Metal Exchange (LME) was up 1.2% at $9,150 a tonne at 1146 GMT, moving towards last week's 10-year high of $9,617.

The metal used in power and construction shot up 15.5% in February as more analysts predicted price rises and speculators piled into the market.

"Sentiment is still very bullish out there," said Commerzbank analyst Daniel Briesemann. But the rally is running ahead of the fundamentals and copper will end the year lower, he said.

POSITIONING: Speculators are bullish with a net long position in LME copper equal to 62% of open contracts by Thursday, the most since 2004, brokers Marex Spectron said.

On the Shanghai Futures Exchange (ShFE), speculators' net long reached 57.9% of open contracts on Friday, the most since 2003, before falling to 51.8% on Monday, Marex said.

COLUMN: Chinese funds have thrown more fuel on copper's flames, writes Andy Home.

GOLDMAN: "The fundamental outlook for copper remains extremely bullish," analysts at Goldman Sachs wrote in a note predicting stellar returns on commodities.

"We continue to forecast the largest deficit in 10 years in 2021 (327,000 tonnes), followed by an open-ended phase of deficits," they wrote. "To reflect the rising probability of scarcity pricing, our 3/6/12M copper targets increase to $9,200/$9,800/$10,500/t."

SPREAD: The premium for cash copper over the three-month contract is around $40 and trending higher, pointing to tight nearby supply.

RIO: The US Forest Service blocked a land swap sought by Rio Tinto in Arizona for its proposed Resolution Copper mine.

MARKETS/DOLLAR: European shares rose. Oil prices fell. The US dollar reached its strongest in almost a month.

CHINA: The biggest metals consuming nation will begin its annual session of parliament on Friday, unveiling a five-year plan to fend off stagnation.

OTHER METALS: LME aluminium was up 1.8% at $2,168 a tonne, zinc was 0.6% higher at $2,832.50, nickel was flat at $18,690, lead gained 0.6% to $2,084 and tin was up 1.2% at $23,750.