LONDON: Copper prices fell back on Thursday but remained near three-month highs after rising sharply the previous day on a weakening dollar and concerns of a supply shortage.
Benchmark copper on the London Metal Exchange (LME) was down 1% at $9,967 a tonne at 1148 GMT after rising 3.5% in the previous session.
Used in power and construction, copper rose 25% in 2021 and 26% in 2020. Many analysts expect the transition from fossil fuels to electrification to boost demand.
"A new wave of buying has started in base metals, especially those directly connected to the green transition," said Gianclaudio Torlizzi at consultants T-Commodity.
"We already had signs of that in less liquid markets like cobalt and lithium, which have spiked higher. It was only a matter of time before copper and nickel would chase them," he said.
Torlizzi said low inventories, Chinese economic stimulus and tight supply could push copper above last year's record high of $10,747.50 a tonne and nickel to $25,000 a tonne, its highest since 2011.
Nickel storms to 10-year peak on worries about supplies
Dollar: The US currency has weakened sharply, including against the yuan, making dollar-priced metals cheaper for Chinese and other non-US buyers.
China: The central bank of top metals consumer China is set to unveil more steps to support economic growth, which is expected to fall to 5.2% this year, a Reuters poll found.
Inventories: Copper stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE), at 29,182 tonnes, are near their lowest since 2009.
Inventories in LME-registered warehouses, at 83,800 tonnes, are down from more than 250,000 tonnes in August.
Nickel: Benchmark LME nickel was down 0.7% at $21,920 a tonne after reaching $22,745, the highest since 2011, on Wednesday.
Nickel is used in stainless steel and in batteries to power electric vehicles.
Inventories in ShFE warehouses, at 4,859 tonnes, are near record lows, while LME stocks are below 100,000 tonnes from more than 260,000 tonnes in April.
Other Metals: LME aluminium was down 0.3% at $2,974 a tonne, zinc fell 0.2% to $3,543.50, lead rose 0.3% to $2,353 and tin was up 0.2% at $41,495.