Copper prices dipped in London on Friday, as traders and investors reassessed the sustainability of a recent rally that pushed prices to record highs.
Three-month copper on the London Metal Exchange fell 0.1% to $10,409 per metric ton by 0811 GMT, while the most-traded July copper contract on the Shanghai Futures Exchange rose 0.1% to 84,050 yuan ($11,601.58) a ton.
LME copper, despite hitting a record high $11,104.50 a ton on Monday, is still down 2.4% on a weekly basis, on track for the worst week since the week ended Feb. 9.
SHFE copper, however, is still set for a weekly gain.
The contract also hit a record high of 88,940 yuan a ton on Monday.
Funds have been buying metals including copper, betting it would be in shortage, as the world needs those metals to transition into a green economy.
The rally was also propelled by a short squeeze on the US Comex exchange. However, physical demand in China, the world’s biggest copper consumer, has been dampened.
The usual premium to import copper into China has been flipped into a discount since mid-May. “Given current fundamental indicators, the move appears overdone and the risk of a sharp correction is very high, if not already under way,” Macquarie analysts noted.
“The mania aspect of the arbitrate is no longer there. The traditional sellers of arbitrage are also back into the market, trying to keep it back to its historical arbitrage range,” a trader said.
Copper retreats on profit-taking
LME aluminium rose 0.4% to $2,632 a ton, zinc edged up 0.3% at $3,071, lead declined 1% to $2,283, tin rose 0.5% to $33,610 while nickel increased 0.8% to $20,245.
SHFE aluminium eased 0.5% to 20,855 yuan a ton, nickel edged down 0.3% at 152,870 yuan, tin fell 0.1% to 273,100 yuan, while zinc rose 1% to 24,725 yuan and lead was nearly flat at 18,490 yuan.
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