Copper fell on Friday as profit taking set in after a frenzied rally that pushed the metal to its best week since 2011, buoyed by Donald Trump's surprise US election victory and improved demand prospects in China. Trump has said he plans to fix inner cities, rebuild highways and infrastructure, and put up barriers against cheap imports. The pledges have breathed fresh life into metals and boosted expectations of rising US inflation.
"It's absolutely extraordinary, I've never seen anything like it in my career," said Macquarie analyst Vivienne Lloyd. "There's expectations of (US) infrastructure spending ... stimulus from countries aiming to calm markets, not least China. However we've gone up $1,000 in a week, it's lost track of the fundamentals." Three-month copper on the London Metal Exchange jumped nearly 8 percent to $6,025.50 a tonne earlier, its highest level since June 2015 and putting it in sight of its best week since since 1980.
It ended down 0.9 percent at $5,549, however, marking its strongest weekly gain since late 2011. "Reality (has) set in," said SP Angel analyst John Meyer. "There is growth in (copper) demand in China and new growth to come from the US, but the pull back to reality is the challenge of creating that growth."
Zinc rose to its highest level since October 2010 at $2,637 earlier, lead hit its highest since September 2014 at $2,226, aluminium touched its best level since May 2015 at $1,794.50 while nickel hit $12,145, its highest since July 2015. The gains came amid a widespread rally in Chinese steel, coal and iron ore prices. Expectations for metals demand have shifted in recent months due to consistently improving economic indicators out of China, the world's largest metals user.
"It (copper) has been building in the past couple of weeks and Trump has kicked it along," said ANZ analyst Daniel Hynes. "It's been more a shift around where the market sees demand (in) 2017." Gains were also amplified by momentum-based fund buying, especially in China. In a bid to curb excessive speculation, the Shanghai Futures Exchange on Friday adjusted transaction fees for copper, zinc and nickel.
"As soon as the dust has settled market participants are likely to start focusing on the fundamental data and they have not changed since ... the US election. There are high risks ... in China," said Commerzbank. Aluminium ended down 1.4 percent at $1,745, zinc closed down 2.1 percent at $2,472, lead ended down 2 percent at $2,111, nickel closed down 2.9 percent at $11,205 while tin ended down 0.6 percent to $21,375.
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