LONDON: Copper climbed on Thursday, recovering from early losses on fund buying after prices failed to break below key technical support levels and the dollar started to fall. Benchmark copper on the London Metal Exchange (LME) was up 0.2% at $10,439 a metric ton at 1356 GMT having fallen as far as $10,210.
It had been dropping due to profit-taking on long positions - bets on higher prices - since hitting a record high of $11,104.5 on Monday. It has since fallen 6.3% but is still up 20% so far this year. Traders said unsuccessful attempts to break below support at $10,200 were behind copper’s price reversal and that short term traders were again betting on higher prices.
“Here we go again,” one copper trader said, adding that the falling dollar had also triggered a fund buying spurt. A lower US currency makes dollar-priced commodities cheaper for holders of other currencies.
Speculative funds have been “cashing out”, but will come back expecting higher copper prices over the long term, Wisdom Tree’s Nitesh Shah said. Copper is crucial for the world’s shift to electrification due to its conductivity. It is mainly used for making cables and wires. But physical consumption has not been able to catch up with the speculative frenzy. Copper inventory remained at a four-year high in China, the top consumer of the metal, as demand waned after prices surpassed $10,000 a ton.
A BNP Paribas research note cited an estimate of 500,000 tons of unsold wire-rod copper stock in China. The global refined copper market showed a 125,000 ton surplus in March, the International Copper Study Group said on Wednesday.
For other metals, lead retreated after hitting a two-year high on Wednesday, last trading 1.2% lower at $2,286. LME aluminium fell 1% to $2,610 a ton, nickel dropped 1.7% to $20,015, zinc edged up 0.1% to $3,066.5 and tin was down 0.2% at $33,110.
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