The price of copper rose to eight-year highs above $2,840 a tonne on the London Metal Exchange (LME) on Tuesday on speculative buying led by investment funds, and analysts and traders expected more gains in the first red-hot bull market of the millennium.
"A kind of copper tsunami broke through today," one trader said.
"It seemed everything came in a wave for the market with strong gains in Shanghai, continued stock worries and dollar weakness, leading to a general reluctance to sell.
"Fund interest and short covering arrived mainly in the afternoon and despite light profit-taking there remains upward pressure in the short term," the trader said.
Copper, dominating action on the LME and in world markets, rose to an eight-year high of $2,842.5 a tonne in early afternoon rings.
Lead hit levels not seen since the contract was denominated in dollars in the early 1990s.
On Tuesday, stocks of copper, aluminium, lead, zinc, tin and nickel - the LME's signature markets - all fell. Copper stores were at their lowest for eight years, while lead stocks were down to levels last seen in June 1991.
"It appears the best advice is 'don't be short'," said Martin Fewings of Mitsui Bussan Commodities.
"The way the market bounced off a dip this afternoon suggests further short covering and it looks unlikely to see a significant correction," Fewings said.
Investment funds have been at the forefront of much of the recent buying, while China has been on a world-wide spending spree to feed its booming economy. Analysts said the metals complex was being boosted by economic recoveries world-wide, led by China.
However, any correction would probably be steep given the fast pace of advancement in LME metals compared with comparatively slower indicators in economic data from the world's largest economy in the United States, analysts and traders said.
"There are a lot of factors out there to keep the tension up but if we don't see significant job regeneration soon it could well cause concern," Fewings said.
Economist at Sempra Metals, John Kemp said: "While the recovery is still unfolding, it has lost some traction, and is nowhere near as strong as the euphoria in financial markets over the past four or five months would suggest.
"For the moment the bull markets in equities and metals are intact. But the seeds of a future correction are being sown."
Traders said any correction would probably be fairly sharp given technical pressures where the 10-day moving average is $200 below Tuesday's market high of $2,842.50.
"In this kind of activity you could argue that technical factors are not so important, but if it does drop then there won't be much of a pause at $2,730 before firm support at $2,650, which implies increased market volatility."
Resistance was cautiously pegged at $2,850.
Other metals were also at new records, with tin reaching an 8-1/4 year peak, zinc at 3-1/4 year highs, and aluminium at new 4-year peaks.
At the close of London trading, copper was at $2,826 a tonne, up $92 from Monday's close, aluminium rose $20.50 to $1,745, lead gained $35 to $897, zinc jumped $23 to $1,129, tin added $35 to $6,750. Nickel bucked the overall trend, easing $80 to $15,450.
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