Copper prices pulled back from fresh highs on Thursday as miners hedged to take advantage of the strongest levels in seven months. Benchmark copper on the London Metal Exchange clawed higher to $6,174 a tonne, the highest since May 10, before reversing and ending floor trading at $6,155, down $1.
"We're really surprised copper has been so strong. I think it was from the rhetoric coming from Trump about China, plus we've had a lot of good data, particularly on the jobs side," said Sucden Financial broker Robert Montefusco.
US President Donald Trump said on Thursday the United States was "very close" to nailing down a trade deal with China.
"We're likely to see a lot of the producers selling up here. Late yesterday there were some upside (option) calls being sold, which was putting some pressure on the market," Motefusco added.
Also weighing on copper was news that Shandong Fangyuan Nonferrous Metals Group, one of China's biggest private copper smelters, denied online speculation that it had filed for bankruptcy and said operations were running normally.
Traders said the rumours had helped to support prices this week because some investors expected shortfalls if Shandong closed.
London Metal Exchange nickel on-warrant inventories - material not earmarked for delivery - soared by 52% in one day to 102,036 tonnes, the highest since Aug. 29, LME data showed.
Sucden's Montefusco said that recent inflows of nickel stocks could be linked to Chinese arbitrage activity and more deliveries are expected in the coming days.
LME nickel prices closed 1.8% higher at a two-week high of $14,100 a tonne. LME on-warrant aluminium stocks climbed by 23,075 tonnes to 1,218,125 tonnes, the highest since March 2017, data showed.
LME three-month aluminium shrugged off the inventory gains to firm by 0.9% to $1,775 a tonne in final open-outcry trading.
LME cash aluminium moved to a discount of $8.75 a tonne to the three-month contract this week after holding at a premium for nearly a month, indicating healthier supplies in the LME system.
Lead has the largest net speculative short position on the LME at 25% of open interest, according to estimates from broker Marex Spectron. LME zinc advanced 1.9% to $2,263 a tonne in closing rings, while lead added 0.1% to $1,938 and tin dropped 0.2% to $17,250.
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