LONDON: Copper prices hit a record high on Monday as the prospect of shortages outside the US spurred speculative fund buying, while the softer dollar reinforced positive sentiment.
Traders said a US holiday meant volumes were muted and more volatile, and that focus was on copper and zinc.
Benchmark copper on the London Metal Exchange touched a record high of USD14,533 a metric ton, surpassing an all-time peak of USD14,527.50 hit in January, before paring gains slightly to USD14,505.50 by 1615 GMT, up 0.6 percent.
The buying was mainly from Commodity Trade Advisor (CTA) investment funds, largely driven by computer programs, but others were holding back, said Alastair Munro, senior base metals strategist at broker Marex.
“Large parts of the discretionary community remain sidelined, wary of getting involved up here with China downstream backing off,” Munro added.
Traders and producers have been shipping large amounts of copper to the US since President Donald Trump mooted import tariffs in February last year. Comex copper stocks stand at a record 766,795 short tons or 695,624 metric tons.
“It’s hard to know what will happen on tariffs, but the longer there is uncertainty, the longer prices will remain elevated as material flows to the US,” said Albert Mackenzie, an analyst at Benchmark Mineral Intelligence.
Elevated premiums or backwardations for nearby contracts against longer-dated forwards have attracted some copper back to the LME.
But cancelled warrants, or metal earmarked for delivery, at 51 percent indicate more than 121,000 tons of copper is likely to leave the LME system over the next few weeks.
The premium for cash over the three-month forward climbed above USD430 a ton in the middle of August, the highest since 2021. It closed around USD74 on Friday.
Another sign of tight supplies outside the US is stocks in warehouses monitored by the Shanghai Futures Exchange at 63,000 tons, down 85 percent since the middle of March and at their lowest since January 2024.
Copper prices on the SHFE are also in backwardation, suggesting the industry in top consumer China is concerned about supplies.
Elsewhere, zinc gained 0.9 percent to USD3,982.50 a ton, supported by tight supplies, after hitting its highest since May 2022 at USD3,998.
A softer US currency, which makes dollar-priced metals cheaper for holders of other currencies, supported base metals overall.
Aluminium rose 0.6 percent to USD3,313 a ton and tin added 0.4 percent to USD55,100, while nickel slipped 0.7 percent to USD16,735 and lead dipped 0.4 percent to USD1,900.50.