Signs of strong demand and dwindling stockpiles plus worries about possible supply disruptions in Chile carried copper prices to a fresh seven-month high on Thursday, analysts said. But later in the session when it was known that production in Chile had not been affected investors locked in profits.
Copper for delivery in three months on the London Metal Exchange firmed to $7,970 a tonne, its highest since September 8 in early trade but retreated to end at $7,690, down 1.8 percent from Wednesday's close of $7,830.
In New York, copper for May delivery slipped 8.05 cents, or 2.2 percent, to settle at $3.5020 a lb on the New York Mercantile Exchange's COMEX division, closer to the bottom of a session range between $3.47 and $3.6245. The $3.6245 session peak was the contract's loftiest level since May 11 of last year when it rose to its all-time high of $3.64.
"Copper was higher this morning because of the problems in the Chilean mine but since the production has not really been affected the prices came off," an LME trader said. Union leaders blockaded the giant Chuquicamata copper mine in northern Chile for most of Wednesday, demanding a meeting with its government owners to discuss contract violations. But on Thursday union leaders lifted the blockade and resumed talks with the world's largest copper miner with production unaffected.
"There were worries about Chuquicamata and the price got within a hairsbreadth of $8,000...in the short-term - provided there are no supply disruptions - I think we have seen the highs," analyst David Thurtell at BNP Paribas said. "People want to lock in profits at these levels and significant forward selling cap prices," he said.
Prices have climbed around 25 percent this year and stocks of copper in LME registered warehouses have fallen almost 20 percent since the beginning of February supporting the market. This week, prices have risen by around 5 percent fuelled by last week's jobs data, suggesting the US economy is stronger than previously thought and renewing investor confidence.
Also underpinning prices China's imports of copper hit a record high of 307,740 tonnes in March as cargoes booked during a period of high premiums early in the year continued to arrive, customs data showed.
"The market was very excited about the Chinese import numbers... but the Chinese buyers are very price-sensitive and back away when prices go above $7,300-7,400," Thurtell said. Threats about substitution also capped prices with BT Group Plc's network unit saying fibre-based infrastructure could become a more attractive alternative to conventional metal wires given the high copper prices. Nickel prices, up around 50 percent since the start of the year, shed 0.9 percent or $400 to $46,400 at the close.
"With nickel what we see is a correction just like in copper, after continuous rises, but the fundamentals for both of the metals remain strong," another LME trader said. Available nickel stocks stand at 2,772 tonnes, less than a day of world consumption. Reflecting tight supply, the premium for cash metal over the three months contract was at $2,400 after trading at $1,650 on March 28.
Aluminium closed $35 lower at $2,835. Lead edged up $10 to $1,980 while zinc fell $10 to $3,510. Tin ended at $14,250 up $100 and close to its all-time high of $14,595.
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