LONDON: Copper prices retreated on Tuesday in cautious trade ahead of the US jobs data as well as year-end thinning liquidity.
Benchmark three-month copper on the London Metal Exchange fell 0.2 percent to USD11,635 per metric ton in official open-outcry trading. It hit a record high of USD11,952 on Friday on worries about tight supply. With thin liquidity, price swings in base metals are becoming increasingly exaggerated, leaving the complex vulnerable to abrupt moves into year-end, analysts at Sucden Financial said.
The metal, used in power and construction, is up 33 percent so far this year, heading for the biggest yearly growth since 2009, due to several mine disruptions, outflows to stocks in the US and expectations of future soaring demand from the AI data centres and the energy transition.
“It’s really the supply side issue that we are seeing this year as we expect this year’s surplus to swing to the market deficit next year,” said WisdomTree commodities strategist Nitesh Shah.
“Demand maybe muted now but it is more about the expectations that copper is going to benefit as the world electrifies,” he added. The Yangshan premium, an indicator of Chinese appetite for copper imports, has stabilised this week at USD42, its two-month high.
Among other LME metals, aluminium rose 0.5 percent to USD2,880 a ton in official activity. Daily LME data showed that on-warrant aluminium stocks in the LME-registered warehouses fell to 452,600 tons after fresh cancellation of 32,025 tons in Malaysia.
Adding further support from the supply side, Australia’s South32 said it would place the Mozal aluminium smelter in Mozambique under care and maintenance by March after failing to secure a power deal with the government. LME lead gained 0.5percent to USD1,950 after hitting USD1,937.5 for its lowest since May, while zinc dropped 1.0percent to USD3,062. Both metals saw major deliveries to the LME stocks, mainly in Singapore. Nickel was down 0.2 percent at USD14,320 after hitting its eight-month low of USD14,235 on Monday, while tin gained 0.4 percent to USD41,100.