Industrial metals reversed early gains on Friday, falling as investors banked profits, analysts said. Copper for delivery in three months, often seen as a gauge of real economic activity, ended the day at $8,405 per tonne at the London Metal Exchange, down $100 from Tuesday's close.
"It has been a very good week. The market is preparing for the roll into new contracts," ABN Amro analyst Nick Moore said. "This is a technical sell-off." Earlier on Friday, copper, mainly used in power cables and buildings, rose to $8,608, its highest since March 7, after gaining 4 percent on Thursday. It is up 25 percent year-to-date.
"There is a lack of interest after prices rose this morning - now people just want to lock in profits," a trader on the floor of the LME said. Many in the market believe prices will rise in the second quarter, a traditionally busy period for copper use.
"We believe further price gains are in store for Q2. The market is looking increasingly tight as we enter the seasonally strong period for demand," analysts at Barclays Capital said in a report. Nickel, a key ingredient in stainless steel, closed $900 down at $30,500 a tonne, but is still up 20 percent year-to-date.
News that the world's biggest miner BHP Billiton had declared force majeure on nickel deliveries from a mine in Colombia due to a strike boosted prices earlier in the day, but was not enough to sustain a rise.
"The nickel fundamental story is slightly more improved on the back of the strike," said Michael Jansen, analyst at J.P. Morgan. "But the reality is that there is so much material around and the stainless steel sector is still weak so you can't really get too excited," he said.
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