Copper prices edged lower on the London Metal Exchange on Thursday as speculative positions started to unwind on doubts about the sustainability of a post US election rally. Three-month copper closed 0.6 percent lower at $5,791 a tonne, not far from a one-week low hit in the previous session.
In contrast, Shanghai copper futures rose nearly 2 percent, benefiting from a rally in oil prices and continued speculative interest after data showed China's factory activity expanded modestly in November, while inflationary pressures showed signs of building. The most-traded copper contract on the Shanghai Futures Exchange hit a session high of 47,570 yuan ($6,900), after falling 3.6 percent on Wednesday.
"The market is fundamentally better than a lot of people thought, in terms of Chinese growth, but the massive speculative buying in China may start to dissipate and hit prices," Citi strategist David Wilson said. "The $5,000 to $5,500 mark is a fair value for copper, it just seems a little overpriced right now." The metal used widely in power and construction hit $6,045.50 on Monday, its highest since June last year.
It rose 20 percent in November, its biggest monthly increase since April 2006, also boosted by prospects that US president-elect Donald Trump would enact reflationary policies funded by large fiscal stimulus. Zinc closed up 0.9 percent at $2,728 a tonne and lead fell 2.2 percent to $2,314. Both metals retreated from multi-year highs hit earlier this week.
The Shanghai Futures Exchange said on Wednesday it would limit intraday position sizes in January and February zinc and lead futures for non-members, moving to curb speculators that have piled into metals. Tin closed unchanged at $21,055 a tonne, while nickel closed down 0.4 percent at $11,210 a tonne and aluminium closed 0.6 percent lower at $1,722 a tonne.
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