LONDON: Copper prices rebounded on Tuesday as investors renewed their buying spree, hoping that supply constraints and buoyant demand would push the market to new peaks.
Three-month copper on the London Metal Exchange (LME) had gained 0.8% to $10,465 a tonne by 1600 GMT after a volatile session the previous day, when it touched a record high before retreating to close in the red.
LME copper notched a record peak of $10,747.50 on Monday, having gained nearly 40% so far this year.
Comex copper rose 0.8% to $4.75 a lb.
“Physical demand in China is still quite healthy. There’s also tightness in copper concentrate supply, there’s a number of issues in Chile and there’s sulfuric acid shortages, too,” said Xiao Fu, head of commodity market strategy at Bank of China International in London.
Many investors are bullish about a new “supercycle” driven by surging demand prospects from metal-intensive renewable energy and electric vehicle sectors and as the global economy steadily recovers from the fallout from the COVID-19 pandemic.
The most-traded June copper contract on the Shanghai Futures Exchange closed down 1% at 76,000 yuan ($11,819.23) a tonne, clawing back from early losses of 2.5%.
“At these very elevated price levels, some people want to take profits and others still want to chase prices higher. So you have these two forces making prices more volatile,” Fu added.
Also supporting metals markets was a softer dollar, which held near 2-1/2-month lows, making commodities priced in the US currency cheaper for buyers using other currencies.
The ShFE copper speculative net long rose to 52.8% of open interest on Monday - the highest level since the position rose to an 18-year high of 57.9% in February - from Friday’s 47.4%, analytics data from broker Marex showed.
LME aluminium dipped 0.2% to $2,525 a tonne, zinc edged up 0.1% to $2,995.50, nickel climbed 1% to $17,935, lead rose 0.2% to $2,217.50 and tin added 0.5% to $29,930.